After The Close
Stocks moved nicely higher today, buoyed by some healthy buying in the mid-afternoon. Despite easing a bit in the final hour, the session was still quite constructive. At the close of trading, the Dow Jones Industrial Average was ahead 255 points; the broader S&P 500 Index was up 36 points; and the NASDAQ was higher by 114 points. Market breadth was overwhelmingly positive, with winners well ahead of losers on the NYSE and the NASDAQ. All of the major market sectors advanced today, with solid gains in the technology and basic materials issues. The defensive utility stocks made more modest progress.
Today’s economic news was supportive, for the most part. Personal income rose 0.4%, while spending increased 0.2%, in the month of February. These figures were in line with expectations. Further, initial jobless claims moved lower to 215,000 for the week of March 17th, showing that employment levels remain healthy. Elsewhere, the Chicago PMI came in at 57.4 in March, where a somewhat higher number was anticipated. There will be no economic releases tomorrow, and the stock market will be closed, in observance of Good Friday.
In the corporate sector, a few visible companies posted reports over the past 24 hours. Specifically, shares of PVH (PVH) rallied after the apparel maker delivered an encouraging report. However, shares of Game Stop (GME) headed lower in response to a weak release.
Technically, stocks rallied today, as the bulls and bargain hunters stepped in to support the market. It remains to be seen if today’s advance will be followed by buying in the week ahead.
Of note, the first quarter of 2018 is now over, and a favorable reporting season might help lift sentiment.
— 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
What a four-day span it had been for Wall Street as we entered the daily stock market grind yesterday. To wit, after the Dow Jones Industrial Average had tumbled by a combined 1,150 points last Thursday and Friday on trade war fears, and rallied notably on Monday, gaining 670 Dow points, stocks started the festivities on Tuesday nicely to the upside. In fact, after the first few hours of trading, the blue-chip composite was ahead by more than 200 points. However, after those trade fears re-emerged and some tech stocks faltered, the bears came back to the fray and the market sold off sharply.
In all, the Dow dropped by 345 points and the NASDAQ, the real casualty, plummeted by 228 points, or some 3%. Then yesterday, the market gyrated from the outset, gaining and losing ground in lock-step fashion, with the NASDAQ again the weak link on tech concerns. Then, as the morning wound down, the bears started to assert themselves, taking the NASDAQ, once more the leading casualty, down by more than a percentage point. The selling, meantime, was exacerbated by additional pressure on Intel (INTC – Free Intel Stock Report) shares, although Facebook (FB), stock, a recent headline casualty, rebounded slightly.
In other news, the Commerce Department reported that fourth-quarter GDP was revised upward to show a gain of 2.9%. Earlier, the period's reported gain had been 2.5%. We think the economy will take a step back in the now-concluding three months, gaining just about 2%, before some probable strengthening takes hold as we move more deeply into spring. As to the fourth quarter, personal spending and inventory accumulation estimates were both revised upward, thereby enhancing the period's performance. The GDP report, which is old news to an extent, however, likely had little impact on the day's performance.
What may have had an impact, though, was a further drop in bond yields, to 2.75% on the 10-year Treasury note in late morning, in what many sense was a flight to safety. This is the lowest rate in some seven weeks. Meanwhile, the selling continued to ebb and flow, with the Dow, for example, going from a loss of 100 points to a gain north of 50 points in just a matter of a minutes, as the morning rolled along toward its conclusion. That fast change underscores the elevated volatility present in the market at this time. In all, as the morning ended, the Dow was ahead 60 points, but the NASDAQ was still lower by about 35 points.
This seesaw action then continued into the afternoon, with the Dow waxing and waning between a triple-digit advance and virtually no gain for several hours, while the NASDAQ remained in the red. All the other composites held firmly in the plus column through the mid-afternoon. Helping to support the advance was a pickup in bond yields, with the 10-year Treasury note's yield rising to 2.79%, following the morning swoon. In addition to the foregoing, the market also was rattled by a suggestion that the President was intent on going after Amazon (AMZN) over taxes. Shares of the e-commerce were down more than 4% in late dealings.
Meanwhile, the market continued to go up and down as the afternoon moved along, with the tech-driven NASDAQ staying below the neutral line, while the Dow and the other indexes continued to press higher, for the most part. This split pattern then would continue until near the close, when some last-minute selling pushed the Dow gingerly into the minus column with a final loss of nine points. Losses were sustained by the S&P 500 Index (eight points), the Russell 2000 (a point and a half), and the NASDAQ, which remained in full retreat losing 60 points, following an earlier deficit of more than 100 points.
Looking out on a new day now, we see that stocks posted gains in Asia in the overnight hours, while on the Continent, the principal bourses are tracking higher. Also, oil prices are ahead slightly so far today, while yields on the 10-year Treasury note, which concluded matters at 2.78% yesterday, are now at 2.77%. Finally, U.S. equity futures are suggesting a stronger opening when trading resumes later this morning.
– Harvey S. Katz, CFA
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
