After the Close
The stock market put in another impressive performance today, adding to yesterday’s gains. At the close of trading, the Dow Jones Industrial Average was ahead about 232 points; the S&P 500 was up 14 points; and the NASDAQ was higher by 42 points. The buyers were out in force today, as advancers easily outpaced decliners on the NYSE. Further, most of the major stock sectors forged ahead, with notable gains in the healthcare, technology, and energy issues. However, the defensive utility names did not participate in the rally, as traders were likely moving their capital into potentially more rewarding stocks. Telecom stocks also lagged.
Meanwhile, today’s economic news was encouraging, for the most part. Specifically, new home sales advanced to an annualized rate of 621,000 during the month of March. This figure was up from the 587,000 number posted in February, and was also higher than had been anticipated. On a related note, according to the Case-Shiller index, home prices increased 5.9% in the month of February, pointing to ongoing strength in the residential real estate sector. In contrast, according to Conference Board, consumer confidence softened slightly in the month of April. Tomorrow will be a light day for economic news, but the pace picks up again on Thursday. On Friday we get a look at the advance estimate for first-quarter GDP.
Elsewhere, a few large corporations posted strong results over the past 24 hours, and that likely helped buoy the major averages. Specifically, shares of Caterpillar (CAT - Free Caterpillar Stock Report) moved sharply higher, after the equipment giant delivered a better-than-expected set of numbers and provided an upbeat outlook. Shares of McDonald’s (MCD - Free McDonald's Stock Report) also forged ahead, in response to a good report.
Technically, stocks have strengthened quite a bit over the past few days. Today’s move puts the Dow Industrials close to the 21,000 mark and the NASDAQ past the 6,000 level. This may hold some psychological sway with investors. – 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 - 12:00 PM EDT
The majority of U.S. equities traded higher on Wednesday morning, with the forthcoming tax reform proposal from President Trump driving the lion’s share of enthusiasm. Along with regulatory overhaul and an ambitious infrastructure plan, lowering the corporate tax rate is one of the central forces that propelled the market to historic levels after November’s election. Since Treasury Secretary Steven Mnuchin confirmed the Administration’s intention to lower the corporate figure to 15%, the valuations of large- and small-cap equities alike have risen. Advancing stocks outnumber declining shares by a more-than two-to-one margin, as market breadth continues to favor the bulls.
The anticipation of the White House’s announcement has especially benefitted the major indexes. The S&P 500 has ticked higher as trading has progressed, while the NASDAQ shook off some earnings-related cobwebs and turned positive a little after an hour into the day. Though the tech-laden group did fall back down to the red around noon, it remains considerably higher for the week, so far. The Dow Jones Industrial Average, amidst this recently rejuvenated rally, is approaching all-time highs. Earnings season, of course, is also well under way. Lackluster outlooks from Boeing (BA - Free Boeing Stock Report) and Procter & Gamble (PG - Free Procter and Gamble Stock Report) led to selling of both equities. But, although the Dow’s components were markedly more mixed in trading this morning, optimism for tax reform has largely drowned out misses on the earnings front.
Meanwhile, oil has fared better today after news that U.S. crude stockpiles fell by 3.6 million barrels last week, a more significant drop than expected. Today’s positive upturn is a much-needed break, as the market has struggled in recent weeks due to doubts over OPEC’s ability to extend its six-month production limit agreement. Around noon in New York, U.S. crude had added $0.23 per-barrel.
The rest of the week’s trading will continue to be influenced by tax reform developments, as well as the looming potential of suspended government funding after Friday’s deadline. But corporate earnings will probably play a larger role, with the bulls appearing dead set on riding this recent wave of enthusiasm. Updates on the economy will become available in the coming two days, as well, with the Friday’s upcoming first-quarter GDP outlook headlining the list. Jobless claims, pending home sales, and an updated consumer sentiment reading should also pique the interest of traders. Stay tuned. – 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 bears hoping for a Monday-Tuesday reversal on Wall Street were thwarted early yesterday as the major equity indexes jumped strongly at the open, with the Dow Jones Industrial Average, a 216-point winner to start the new week, soaring by just over 200 points again in the first few minutes of trading. It should be noted that on Monday, the impetus for the eye-catching rally had been the benign outcome of France's first round of Presidential voting; in dealings early yesterday, it was strong metrics from a succession of high-profile U.S. corporations.
To wit, earth-moving giant and Dow member Caterpillar (CAT - Free Caterpillar Stock Report) posted materially higher-than-expected first-quarter net per share sending that stock strongly higher after an initial trading halt. Also advancing nicely on earnings was chemicals behemoth DuPont (DD - Free DuPont Stock Report). Meantime, not only did the Dow race ahead, but so did the tech-laden NASDAQ, which surpassed 6,000 for the first time ever. However, it was the Dow, underpinned by the higher earnings, in particular from Caterpillar, which rose disproportionately in early dealings.
The follow-up rally then continued into the middle and latter stages of the morning with optimism on the profit front being the key element in the buying, which brought the Dow back just above 21,000, before slightly backtracking in dealings thereafter. Meanwhile, though most stocks rallied, one-time growth vehicle Xerox (XRX) faltered, easing by 5% to near the year's low on disappointing revenues. Also helping, in addition to earnings, was a solid report on new home sales. That metric, expected to come in at 590,000 annual units in March, jumped, instead, to an annual sales rate of 621,000 homes.
Also of note, consumer confidence figures for April showed some modest easing, but nothing to shake the confidence of the Street, which is currently focusing on earnings to the exclusion of most other factors, now that France's election seems likely to break in favor of that nation's continued membership in the European Union. In all, as we neared noon in New York, the Dow was the clear winner dancing around the 21,000 mark with a gain of some 240 points. Lesser improvement was being noted, meanwhile, among the other key indexes. Still, it was a clear run for the roses once again for the bulls.
The market advance then kept on going after lunch, with the Dow largely maintaining a gain on the order of 250 points into the middle of the afternoon's trading. As before, the blue chip composite was leading the way higher, with almost all of the key equity groups participating in the uptick. Interestingly, while nine of the 10 groups were higher at that point (just the utilities were giving ground grudgingly), none of the sectors was up as much as a percent. Also, gaining stocks held a five to two advantage over losing issues, which was about the same as on Monday.
Things changed little as we moved toward the close, with the averages retaining most of their impressive gains for the day on those higher earnings. All told, the Dow concluded matters ahead by 232 points, or well over 1%; the S&P 500 added 14 points, or about two-thirds of a percentage point; and the NASDAQ climbed 42 points, allowing that index to hold comfortably above the 6,000 market it had secured earlier in the day. As before, gaining stocks easily led declining issues, with the gains spread out to almost all of the 10 leading groups.
Now, a new day begins, and as we normally do, we look across to Asia, where the major indexes were higher in overnight dealings on the backs of strong U.S. earnings. Meantime, the bourses are lower in early morning trading in Europe, where the markets have been strong this week on the benign outcome to the first round of France's Presidential election. Also of note, Treasuries are mixed as investors await the President's tax proposals; oil is off a tad on bulging crude stockpiles; and U.S. futures are mixed ahead of the open at 9:30 AM (EDT). – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
