After The Close
The stock market put in another choppy performance today, ending the session on a mixed-to- weak note. At the close of trading, The Dow Jones Industrial Average was down about 14 points; the broader S&P 500 Index was up nominally; and the NASDAQ was lower by 18 points. Market breadth indicated a divided session, with decliners just ahead of advancers on the NYSE. Further, many of the large equity sectors lost ground today, with notable weakness in the technology and basic materials issues. In contrast, the energy names managed to make some progress.
In economic news, existing home sales came in at an annualized rate of 5.6 million units during the month of March. This figure was slightly better than analysts had anticipated. Tomorrow we will get a look at monthly new home store sales figures. In addition, the Conference Board’s Consumer Confidence Index for the month of April will also be released.
In the corporate arena, the first-quarter earnings season is still in full swing. Today, shares of Halliburton (HAL) traded slightly higher, after the oil services company posted mixed results. Meanwhile, shares of Hasbro (HAS) moved up in price, even though the toymaker delivered a weak report.
Technically, the stock market managed to rally during the first half of April, but seems to be pulling back as the month draws to a close. The selling that we have seen over the past few days has pushed the S&P 500 Index back below its 50-day moving average, located at the 2,690 level. Lately, it has been difficult for the market to make a sustained advance. Instead, stocks have been trading in a choppy range. This may suggest that a clearer sense of direction is needed.
– 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 most recent five-day stretch on Wall Street marked the second-consecutive winning week for those long equities, but the gains were not as large as the previous week. Indeed, a notable selloff on Friday pared a good deal of the gains the major indexes held at the start of the week’s final trading session. Earlier in the week, the major averages were helped by encouraging first-quarter quarterly results from Corporate America, including a favorable report from Dow-30 component UnitedHealth Group (UNH – Free UnitedHealth Stock Report). However, worries about rising bond yields and inflation late in the week unnerved investors—and took some starch out of the bulls.
On Friday, the bears were in control from the start of the session, with concerns about rising fixed-income yields and, if they were to continue, what impact it may have consumer sentiment and, ultimately, spending down the road. The market was also hurt by a retreat in shares of Apple (AAPL – Free Apple Stock Report), which accounted for nearly 25% of the 202-point decline for the Dow Jones Industrial Average. A down day for Apple stock also hurt the technology heavy NASDAQ Composite. Ahead of Apple’s first-quarter earnings report on May 1st, analysts expressed concerns about a possible slippage in iPhone sales and the impact such may have had on March-quarter sales and earnings figures. The Apple news overshadowed a better-than-expected showing from struggling industrial company General Electric (GE – Free GE Stock Report).
The earnings news will remain hot and heavy again this week, led by reports from 12 Dow-30 companies. The week concludes with reports from petroleum giants Exxon Mobil (XOM – Free Exxon Stock Report) and Chevron (CVX – Free Chevron Stock Report) on Friday. Speaking of oil, the price of the energy commodity fell late last week after a recent surge following commentary from President Trump on OPEC. The President blamed the Saudi-led cartel for artificially inflating crude prices.
Meanwhile, in addition to the aforementioned setbacks for the Dow 30 and the NASDAQ Composite, the broader S&P 500 Index gave back a good portion of the weekly gains heading into the final session. The selling was broadbased, with declining issues outnumbering advancers by a comfortable margin on both the New York Stock Exchange and the NASDAQ, and all of the 10 major equity groups finished the day in the red. The selling was most pronounced in the more economically sensitive sectors. On a relative basis, the financial stocks delivered the bearish day’s best performance, helped by a solid showing from the banks. The aforementioned rising bond yields were viewed as a positive for the earning power of the banks. However, it hurt the higher-yielding utilities, consumer staples, and telecom categories, as higher fixed-income rates makes bonds attractive alternatives to the higher-yielding equities.
Looking ahead to the new week, in addition to the heavy dose of earnings data, investors will have to digest, there will be a number of important reports on the economy, including the latest data on existing and new home sales and durable goods orders. And on Friday, we will get the initial estimate of first-quarter GDP.
With less than an hour to go before the commencement of new trading stateside, the equity futures are slightly positive, but the for the most part relatively unchanged. Overnight, the main indexes in Asia finished modestly lower overnight, while the major European bourses, like the U.S. futures, are nominally positive. Perhaps, investors are taking a wait-and-see approach today ahead of a batch of reports from Corporate America this week, including data from six Dow-30 components tomorrow. Stay tuned.
— William G. Ferguson
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
