After The Close
The stock market got off to a tentative start today, firmed up in the early afternoon, but eased into the close. At the end of trading, the Dow Jones Industrial Average was ahead 11 points; the S&P 500 Index was up three points; and the NASDAQ was higher by 15 points. Market breadth showed a somewhat mixed session today, as winners were just ahead of losers on the NYSE. The conglomerates and financials led the way higher, offsetting weakness in the utility and basic materials issues.
In economic news, it was a light day for reports. However, according to the Commerce Department, personal income rose 0.1%, with spending up 0.9%, for the month of March. These figures were constructive, especially as inflation remains under control. Tomorrow, we will get a look at the consumer confidence report for the month of April, and pending home sales figures for March. Looking further ahead, on Friday, the government will release the April employment report. That issuance will be widely watched by traders.
In the corporate arena, the first-quarter earnings season is now well in progress. This morning was somewhat quiet. However, after the market closed this afternoon, Alphabet (GOOG) weighed in with its numbers. At first look the top line was somewhat soft, putting some pressure on the stock in after hours trading. Tomorrow, we will hear from some large names, including Pfizer (PFE – Free Pfizer Stock Report) and Apple (AAPL – Free Apple Stock Report) will report after the closing bell.
Technically, the stock market continues to drift higher. However, the pace has been somewhat measured lately. This may be a positive development, given the sizable gains we have already logged this year.
- 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 full trading week of April was another constructive one for the U.S. stock market. The major equity indexes, save for the Dow Jones Industrial Average, which was relatively flat over the five-day stretch, made some more progress, with the NASDAQ Composite and the S&P 500 Index delivering respective weekly gains of 1.9% and 1.2%. The buying was rather broadbased, with the small- and mid-cap sectors also making a move higher. For the most part, the equity averages were driven by earnings news and some important economic data. Trade talks between the United States and China were not the focus of the investment community, but on Friday President Trump and Japan’s Prime Minister Abe met to discuss a trade deal between the two countries, with officials confident that an agreement can be reached in May.
On the final trading day of last week, earnings and economic news were the big stories. Before the market open, the Commerce Department reported its initial estimate on first-quarter GDP and it made for a nice reading. Specifically, the economy expanded at an annualized rate of 3.2%, which was stronger than the year-earlier pace and far exceeded the consensus expectation. The surprisingly strong reading was another indication that the previous sentiment that domestic growth is slowing may have been a bit overblown. The positive GDP data embolden investors, and along with some mixed earnings news helped the major averages make more progress.
On Friday, the Dow 30, the NASDAQ, the S&P 500 Index, and the small-cap Russell 2000 produced respective advances of 28, 81, 14, and 16 points. The stocks in domestic dominated Russell 2000 were helped by the aforementioned strong GDP data, while the NASDAQ Composite got a big boost from impressive earnings results from a couple of technology behemoths, including Amazon.com (AMZN). The Dow 30 was held in check by some uninspiring reports from oil giants Exxon Mobil (XOM – Free Exxon Mobil Stock Report) and Chevron (CVX – Free Chevron Stock Report), and weaker-than-expected guidance from Intel (INTC – Free Intel Stock Report) after the close of trading on Thursday afternoon. All in all, with a good portion of the S&P 500 companies having reported, the quarterly results have beaten previously reduced expectation on Wall Street.
The earnings news will continue this week, with a number of Dow-30 components scheduled to report results, including technology giant Apple (AAPL – Free Apple Stock Report) after tomorrow’s closing bell. Before we get to the Apple news, investors will get data from fellow Dow-30 members Pfizer (PFE – Free Pfizer Stock Report) and McDonald’s (MCD – Free McDonald’s Stock Report) on Tuesday morning. Likewise, we will get some important data from the business beat, highlighted by the April employment report on Friday morning. Prior to the jobs figures, we will get reports on consumer confidence, manufacturing activity, and nonmanufacturing activity. And just moments ago, the Commerce Department reported data on personal income and spending for the months of February and March; the February data were delayed due to the government shutdown earlier this year. Personal income increased 0.2% and 0.1% and in February and March, respectively, after declining by 0.1% in January. Meantime, personal consumption expenditures increased 0.1% and 0.9% in February and March, respectively, after a 0.3% rise in the year’s first month. The increased in spending the last three months is a sign that consumers are feeling more confident about their near-term economic prospects.
Meantime, the Federal Reserve will commence its latest two-day meeting on monetary policy tomorrow morning. On Wednesday afternoon, we will get the Fed’s statement on monetary policy at 2:00 P.M. (EDT). The prevailing expectation is that the central bank will hold interest steady. Our sense is that the investment community will be more interested to hear what the lead bank has to say about future interest-rate decisions, especially given the strong March employment data and Friday’s better-than-expected reading on GDP. Investors should note that often trading is subdued in the days leading up to the Federal Reserve’s statement, and a quick glance at today’s futures that may be the case at the start of the trading week. That said, with the heavy amount of earnings reports to hit the wire this week, including the latest quarterly snapshots from the aforementioned Dow-30 companies, we are not overly confident that the normally subdued trading prior to the Fed news will hold to form this time.
With less than an hour to go before the commencement of the new trading week stateside, the equity futures are indicating a flat opening for the U.S. stock market. So far overseas, the main indexes in Asia finished mostly higher overnight, while the major European bourses are not too far removed from the neutral line, as trading moves into the second half of the session on the Continent.
– William G. Ferguson
