After The Close
The stock market moved sharply lower earlier today, but managed to pare most of its losses in the afternoon, even turning positive briefly. Much of the choppiness today had to do with investor worries about the global economy, as well as some possible bearish signals forming in the bond market. At the end of trading, the Dow Jones Industrial Average was down 32 points; the S&P 500 Index was off 13 points; and the NASDAQ was down 48 points. Market breadth showed a negative bias to the session, as decliners outnumbered advancers on the NYSE. The selling today was concentrated in the technology and healthcare names, while the consumer stocks managed to display a degree of relative strength.
It was a light day for economic news. However, there was one notable item worth mentioning. Specifically, the nation’s trade gap narrowed to $51.1 billion in the month of January, which was a much better reading than had been anticipated. Tomorrow, we will get a look at the latest weekly initial jobless claims and the monthly pending home sales figures.
In the corporate sector, a couple of homebuilders recently weighed in with their results. Specifically, shares of KB Home (KBH) moved up in price in response to a solid release. In addition, Lennar (LEN) put out a mixed report, but provided an upbeat outlook, and that helped push the stock higher.
Technically, equities have been under some pressure over the past week, or so. Perhaps, as the first quarter of 2019 comes to a close, and the earnings season starts up, sentiment on Wall Street will improve. However, this assumes that some of the large companies offer supportive guidance.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell
Specifically, after a muted session on Monday--as the market sought stability after the Dow Jones Industrial Average had fallen by 460 points this past Friday--stocks roared out of the starting gate yesterday, with the 30-stock composite surging by 280 points in the early going. The market would retain that strong showing into the noon hour when some selling would take that index down about 100 points in short order. However, the overall trend would stay positive through the lunch hour despite some additional soft economic issuances earlier in the day.
On that count, for example, data issued before the market opened showed that privately owned housing starts had fallen by 8.7% in February, a much larger setback than forecast. Also, building permits, a more forward looking indicator, also eased last month, but that decline was just 1.6%. And, in an encouraging trend, permits are now at a higher absolute level than starts, suggesting that we could see some firming in the months to come. That is especially so now that mortgage rates are falling back in concert with the overall downward trend in borrowing costs.
Also of note, some 30 minutes into the trading session, the Conference Board reported that its consumer confidence survey had faltered somewhat in March, easing from 131.4 in February to the latest tally of 124.1. The research organization opined that confidence has been volatile in recent months as consumer have had to weather volatility in the financial markets, the earlier partial government shutdown, and a poor February jobs report. Still, in absolute terms, the 124.1 reading was quite high. But whether it was this report or the housing number, the market's early strength could not be sustained as the afternoon progressed.
In fact, as we moved inside the final two hours of trading, the market withered still further, with the Dow giving back all but some 40 points of that 280-point advance. The other composites also wilted in the afternoon selloff. It seems that sentiment was again dampened by growing fears of an economic slowdown in the world's economy. This concern was fortified by the recent drop in the 10-Treasury note's yield to below that of the three-month Treasury bill. This so-called yield inversion is often considered to be a reliable indicator of a pending recession.
Stocks would then steady themselves into the close and actually improve during the final minutes of trading, adding some 80 Dow points in a matter of minutes to close the session with an advance of 142 points. Gains of 20 points and 54 points would be tallied, respectively, by the S&P 500 Index and the NASDAQ, with the small- and mid-cap composites both more than holding their own. It seems as though the market was able to battle through the current economic headwinds on our shores and look to the possibility that a more dovish Fed could start to reduce interest rates by later this year.
Looking ahead to a new day now, we see that the major indexes in Asia were mixed overnight, while in Europe, the key bourses are showing early losses. In other markets, oil prices up yesterday, are down so far this morning, and yields on the 10-year Treasury note, down a tad again yesterday, are now falling further on recession fears. As to our markets, the early read on the equity futures was weaker on those growing economic concerns on both sides of the Atlantic,but those figures are now mixed.
