After The Bell
Stocks moved lower today, but managed to regain some ground in the afternoon. At the end of trading, The Dow Jones Industrial Average was down 83 points; the broader S&P 500 Index was off 15 points; and the NASDAQ was lower by 57 points. Market breadth showed some weakness to the session, with decliners outpacing advancers on the NYSE. Most of the major equity sectors retreated today, with notable losses in the technology and select consumer names. In contrast, the energy and financial stocks managed to move up slightly.
Today’s economic news was mixed. Specifically, initial jobless claims came in at 232,000 for the week of April 4th, where a lower figure had been anticipated. Further, The Conference Board’s Leading Indicators Index rose 0.3% in the month of March, which was an in-line reading. Elsewhere, the Philadelphia Fed Business Survey showed a modest uptick during the last reported month. There are no economic releases slated for tomorrow.
In the corporate sector, numerous companies delivered quarterly profit reports over the past 24 hours. Specifically, shares of American Express (AXP – Free American Express Stock Report) headed sharply higher today, after the financial giant posted a solid report. In the technology space, shares of Taiwan Semiconductor (TSM) slipped in price after that company provided a weak outlook. Coming up tomorrow, investors will be closely watching the results from General Electric (GE – Free GE Stock Report), as that stock has come under pressure in recent months, and many on Wall Street wonder if a turnaround is in the making.
Technically, the stock market managed to firm up during the first weeks of April. Looking ahead, much will depend on the results still to be released, as the earnings season unfolds.
— 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
Following back-to-back strong sessions to start the trading week on Wall Street, stocks got out of the gate with a slight upward bias yesterday. But the market soon ran into some profit taking, which pushed the Dow Jones Industrial Average into the minus column for a brief span. Much of that's setback was IBM (IBM – Free IBM Stock Report) inspired, as the technology stalwart and Dow component beat expectations, but saw its profit margins lag. The stock tumbled by more than 7%, in response. The slide in IBM (it received critical appraisals from some analysts), as a result, did not do much damage, overall, as the market continued to gain from solid earnings.
In fact, save for the Dow and the NASDAQ, which is heavily weighted in tech, the market did well, with the S&P 500, the S&P 400, and the small-cap Russell 2000 all gaining in the morning and throughout the day. Doing especially well were the old-line industrials on the Dow, such as Caterpillar (CAT – Free Caterpillar Stock Report), while some health care and defensive issues lagged. Importantly, though, the weakness in IBM did not spill over to the rest of the technology group, so stocks more than held their own as the morning wound down. In the meantime, there was little on the economic calendar to excite investors one way or the other until the Beige Book was released.
As for the nation's economy, it has been more than holding its own, with recent sessions seeing the release of upbeat data on retail sales, industrial production, and housing starts. But the economy and, for that matter, international and domestic events have been taking a back seat to earnings this week, and that is helping the market notably. So, as the morning wound down, stocks were still heading higher, with the Dow joining the advance, albeit modestly, while the NASDAQ, once off by more than 20 points, climbing into the green by that amount, even as IBM continued to falter.
Meanwhile, as the NASDAQ improved, the Dow started to weaken some as we entered the afternoon, and as we moved inside the final two hours of the trading session, the blue chip composite had eased by some 40 points. But that was a short-lived setback, and the loss in that index soon narrowed, as an overall positive bias to the mid-week session was maintained. The Dow, in fact, would soon return to the black for a time. The rest of the afternoon would see the Dow move in and out of positive territory, with general optimism about earnings being offset by the aforementioned weakness in IBM, which persisted all afternoon.
In regard to the aforementioned Beige Book, which is a Federal Reserve-issued survey of economic conditions across the country, it noted that the economy was continuing to expand at a modest to moderate pace. However, some contacts maintained that various sectors, including manufacturing, agriculture, and transportation, were seeing concerns about the newly imposed tariffs. Consumer spending, meantime, was advancing nicely, but results were mixed for vehicle sales. Also, construction was doing well; employment growth was continuing; and prices were increasing across all 12 Fed Districts.
There were no major surprises in the report, with just the recent and potential imposition of the tariffs being of some concern. So, there were no big surprises in the market down the stretch, and as the final bell sounded, we saw that the Dow ended with a loss of 39 points, while the other indexes, led by the small-cap Russell 2000, all closed higher. Breaking the market advance down, we see that seven of the top 10 sectors ended higher, with sharp gains in energy and basic materials, while the consumer category led the way lower. Also, the Big Board saw an advance-decline ration of some four to three.
Looking ahead to a new day, we see that stocks in Asia were trading somewhat higher overnight, while in Europe, the major bourses are showing little change early. Also, oil prices are up again and Treasury note yields, up rather sharply yesterday, ending the session at 2.87% on the 10-year note, are passing hands now at 2.90%. Finally, the generally higher close in New York yesterday is being followed by action indicating a flat-to-lower opening for U.S. equities stateside this morning.
– Harvey S. Katz, CFA
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
