After The Close
The stock market opened higher this morning, and managed to build on these gains through the afternoon. At the end of session, the Dow Jones Industrial Average was ahead about 330 points; the S&P 500 Index was up 33 points; and the NASDAQ was higher by 100 points. Some upbeat economic news here at home, and a sense that China’s economy is doing better, likely helped fuel the advance. Market breadth was quite favorable, with advancing issues well ahead of decliners on the NYSE. The energy, technology, and financial names led the market higher. In contrast, the defensive utilities, often held for dividend income, failed to participate in today’s rally.
Traders received a few economic reports this morning. Of note, business inventories rose 0.8% during the month of January, which was a better-than-expected reading. In addition, the ISM Manufacturing Index came in at 55.3 for the month of March, which was also a favorable showing. Finally, construction spending picked up in February, where analysts had been anticipating some softness.
In the corporate sector, few companies delivered profit reports this morning. However, it is probably worth mentioning that shares of Lyft (LYFT) traded lower today, after last week’s widely followed IPO. Many investors are likely watching this issue, as the emerging ride-sharing industry is a major area of interest.
Technically, the second quarter has just commenced, and sentiment seems to be bullish, at least, so far. Looking ahead, many corporations will be delivering their first-quarter results in the coming weeks. Clearly, traders will be watching these issuances closely. Furthermore, investors will be looking for improved trade relations between the U.S. and China.
- 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
The final trading week of the month of March saw the major equity averages rally after a previous volatile five-day stretch On Wall Street. Last week started out with investors unnerved about the slowing global economic growth, particularly in China, Germany, and Italy, and worries that the dour tidings from overseas would find their way over to the homeland. That sentiment was stoked by the U.S. yield curve inverting in the prior week, an event that is often seen as a portent of recessionary times ahead. But as the week progressed, the equity indexes rallied, with investors emboldened by reports that the United States and China may be moving closer to a trade deal to end more than a year of bickering between the world’s two-largest economies.
The final day of trading last week was a big win for the bulls. As noted, optimism regarding trade fueled the investment community’s buying interest. Specifically, Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer wrapped up meetings in Beijing on Friday, with talks scheduled to continue this week when Chinese Vice Premier Liu He visits Washington D.C. The growing enthusiasm about trade progress temporarily helped ease rising concern over slowing economic growth. For the session, the Dow Jones Industrial Average, the NASDAQ Composite, and the broader S&P 500 Index produced respective gains of 211, 60, and 19 points. Overall, advancing issues comfortably led decliners on both the New York Stock Exchange and the NASDAQ, and all of the 10 major equity groups finished in positive territory. The leadership came from the technology and healthcare sectors.
Looking to the week at hand and the start of April, the investment community will be keeping close tabs on the ongoing trade negotiations between the United States and China. And with first-quarter earnings season still about a fortnight away from commencing, investors will be focused on the business beat. (We will get data from Dow-30 component Walgreens Boots Alliance (WBA – Free Walgreens Boots Alliance Stock Report) before the open of trading tomorrow morning.) It will be a big week for economic news, led by Friday’s report on employment and unemployment from the Labor Department. After the release of a dismal jobs report last month that showed that nonfarm payrolls increased by a meager 20,000 positions in February, job creation is estimated to have rebounded by 178,000 nonfarm payrolls in March. The unemployment rate is anticipated to have stayed steady at 3.8%. In addition to jobs report, we will get data this week on manufacturing activity (at 10:00 A.M. this morning), nonmanufacturing activity (Wednesday) and durable goods orders (tomorrow). And just minutes ago, the Commerce Department reported that retail sales for the month of February and it made for a mixed, though somewhat disappointing, reading. Specifically, advance estimates of U.S. retail and food services sales for February 2019, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $506.0 billion, a decrease of 0.2% from the previous month, but 2.2% above February 2018. The expectation was that retail sales advanced by 0.2% in February.
Nevertheless, with less than an hour to go before the commencement of the new trading week stateside, the equity futures are indicating a sharply higher opening for the U.S. Stock market. The main catalyst appears to be some encouraging economic and trade news from China. First, China’s manufacturing sector rebounded in March, signaling a stabilization in the economy as recent monetary policy stimulus gains footing. It was the biggest month-to-month jump for that country’s manufacturing purchasing managers index (to 50.5 from 49.2 in February) since 2012. Second, China’s government said it will extend the suspension of retaliatory tariffs on U.S. autos and include the opioid fentanyl in a list of controlled substances, two steps that could possibly aid in the trade negotiations set to resume this week. Not surprisingly, the main indexes in Asia jumped overnight, while the major European bourses are nicely higher, as trading moves into the second half of the session on the Continent. Stay tuned.
– William G. Ferguson
