After the Close
Stocks got off to a lackluster start this morning, but managed to put in a selectively constructive session. At the close of trading, the Dow Jones Industrial Average was down 42 points; the broader S&P 500 Index was ahead three points; and the NASDAQ, which displayed some leadership, was higher by 22 points. Market breadth was favorable, as winners outpaced losers by a healthy margin on the NYSE. Many major equity sectors forged ahead, with the best gains in the energy category. On a related note, the price of crude oil strengthened today, and is once again approaching the $50-a-barrel mark. The technology issues also had a good day, helping the NASDAQ. Meanwhile, the financial stocks and the high-yield utilities lost some ground.
Traders received just one important piece of economic news this morning. Specifically, pending home sales rose 5.5% during the month of February, surpassing analyst expectations. Tomorrow will be a busier day for news. The final estimate for fourth-quarter GDP will be released. In addition, we will get a look at the latest weekly initial and continuing jobless claims.
Meanwhile, a few corporations posted their results over the past 24 hours. Specifically, shares of Restoration Hardware (RH) moved up nicely in response to a better-than-expected release. However, shares of Dave & Busters (PLAY) slipped in response to soft guidance. After the market closes lululemon Athlectica (LULU) will weigh in with its numbers.
Technically, the stock market seems to be firming a bit. Of note, a recent bout of selling pushed the S&P 500 Index back to its 50-day moving average, located at roughly 2,335, a few days ago. That level seems to be providing some support, for now. – Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Mid-Day Update - 12:05 PM EDT
U.S. stocks were mixed on Wednesday morning, with the Dow Jones Industrial average returning some of its 150-plus point gain from yesterday’s rout by the bulls. Following a choppy open to trading, both the S&P 500 and tech-heavy NASDAQ spent much of the morning in positive territory. Small- and mid-cap equities are faring better than the large-cap issues, where trading is probably being impacted by Friday’s failed healthcare repeal bill and the initiation of the United Kingdom’s exit from the European Union. The former may threaten the timing of tax reform and infrastructure spending, as the Trump Administration realistically has until the August recess to pass at least one of the measures.
Some sector rotation is occurring, too. The financial group is among the morning’s biggest laggards, returning some of the aggregate value attained during yesterday’s rally. Industrial stocks have followed a similar path. But the cyclical consumer goods grouping continues to outperform. Also, the tentative optimism that President Trump will still be able to implement a massive infrastructure spending order is reflected in the positive movement registered by the basic materials sector so far in the day.
Meanwhile, U.S. crude continues to recover some of its per-barrel value. The U.S. Energy Information Administration’s update showed domestic stockpiles rose by about 900,000 barrels last week. While this is a continuation of the very inventory concerns that have pressured gas prices for some time, the growth is markedly less than the 1.4 million barrel estimate. Also helping to stoke recent optimism is the growing belief that OPEC will be able to extend its thus-far successful drilling accord through the end of the year. Accordingly, energy stocks are holding onto to the widest gain among the sectors today.
So, as we entered the midday, we see the S&P has dipped below the breakeven line. The NASDAQ is holding on to a slight advance, while the Dow appears unable to shake the cobwebs and ascend past its negative range, falling about 70 points. Advancing issues outnumbered declining issues as we approached lunchtime in New York, further underscoring the mixed tone driving today’s trading. – Robert Harrington
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before the Bell
The stock market, which meandered about to a mixed close on Monday, following the inability of Congress to fashion a replacement for the Affordable Care Act last week, started yesterday's session in similarly mixed fashion. But that early reluctance to take the market higher did not last very long. Indeed, on the heels of a strong surge in consumer confidence (a report issued by the Conference Board a half hour into the trading day showed sentiment climbing to its highest level since late 2000), stocks rallied notably from mid-morning on, so that by noon on the East Coast, the Dow Jones Industrial Average had gained about 100 points.
Specifically, confidence, buoyed by perceptions of a better job market, jumped to 125.6 for the now-ending month, from 116.1 in February (which, itself, represented an upward revision from the data released a month ago). That strength, plus a report showing further gains in home prices, helped to set the stage for a resumption of solid Wall Street gains. This was a welcome reversal for the bulls, who had seen the Dow fall for eight straight sessions, the longest losing streak by that composite since 2011. The market then continued to head higher as the afternoon got under way.
Meantime, the day's advance was formidable as well as broad, with gaining stocks, at the time, leading issues falling in price by a two-to-one ratio on the Big Board. It seems as though the good news on the economy, especially the confidence figures, and hopes for the remainder of President Trump's reform package, in particular the advertised tax cuts, are combining to restore confidence among the bulls. So, the market entered the early and middle stages of the afternoon with buying intact. Building optimism about first-quarter earnings season, which will be coming up in about a fortnight, also aided sentiment.
The advance took on a life of its own, as the morning's best Dow levels just about doubled in the mid-afternoon to show a gain of some 175 points as the final two hours got going. Leading the charge were technology issues, with Dow component Apple (AAPL - Free Apple Stock Report) shares surging by better than $3.00 in late afternoon, to yet another all-time high. Also aiding the blue chip index was a near 2% climb in shares of Goldman Sachs (GS - Free Goldman Sachs Stock Report). The small- and mid-cap indexes, late to the party yesterday morning, entered the fray as the session wound down.
The market then remained solidly in the plus column as the session wound down, boosted as well, we think, by comments from Federal Reserve Vice Chair Stanley Fischer, who intoned that he saw two additional interest rate increases this year. As the Vice Chair is considered one of the bank's more hawkish members, his modest expectations were soothing to the bulls, who might see a more aggressive stance as potentially threatening to the up market's durability. In any case, the market rebound broadened late in the day, with nearly three stocks gaining for each one falling on the NYSE. Most of the 10 sectors were also participating.
The final minutes then brought some slight retracement of the day's best gains, with the Dow, once up 185 points, settling in with a 151-point advance. Also, the S&P 500 Index, at one time ahead 22 points, ended matters up 17 points. Additionally, the NASDAQ retained a strong 35-point gain, while comparable improvement was tallied by the S&P Mid-Cap 400 and the Russell 2000. At the close, moreover, eight of the 10 leading sectors were higher, led by energy (on higher oil postings) and industrials, while advancing stocks still led declining issues by almost three-to-one on the NYSE. There were few places for the bulls to hide.
Looking out at the middle day of the trading week, we see that stocks were, not surprisingly, trending a bit higher, as well, in Asia overnight, while equities were also moving ahead on the European Continent so far this morning. In other markets, oil is up slightly; interest rates, up modestly stateside yesterday, are trending slightly lower so far today, while our futures are showing some early slippage in possible moves to take profits. Thus, we could see some backtracking early following yesterday's big gains. Going forward, we sense the doings in Washington and on the corporate earnings front will dictate the direction of the U.S. stock market. – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
