After The Close
Stocks made solid progress earlier today, softened in the afternoon, but managed to recover somewhat in the final hour of trading. At the end of the session, the Dow Jones Industrial Average was ahead 39 points; the S&P 500 Index was up six points; and the NASDAQ was higher by 46 points. Market breadth was constructive, as winners outpaced losers on the NYSE. The technology and financial issues forged ahead, while the industrial issues lagged the pack.
Today’s economic news was somewhat uninspiring. According to Automatic Data Processing (ADP), 129,000 private sector jobs were added to the economy in the month of March. Analysts had been looking for a considerably higher number. We will get another look at the nation’s employment situation when the government releases the March employment report early Friday morning. While it would be encouraging to see the economy making additional progress, it should be noted that investors are not expecting any further interest-rate hikes at this point.
In the corporate arena, a few companies weighed in with profit reports over the past 24 hours. Of note, shares of Dave & Buster’s Entertainment (PLAY) traded higher today, after the company put out a solid release.
Things did not go as well for Game Stop (GME). That stock lost ground after the retailer issued disappointing results.
Technically, stocks continue to rally. Many on Wall Street are hoping a deal with China will soon be reached. Further, some traders may be hoping that the first-quarter earnings season, assuming the results are decent, will lift stocks in the coming weeks. Finally, while many institutional investors adopted a defensive posture earlier this year, they may feel compelled to enter the market, as they look to deliver competitive returns.
– 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
Breaking things down, the consumer staples sector was a weak link, while the basic materials were strong. As for Walgreens Boots Alliance, the giant drug store chain reported weaker-than-expected earnings for the latest quarter. That company also lowered its net forecast for the year. Competitor CVS Health Corp. (CVS) also saw some selling, following the poor reception for Walgreens. As for the market, this modest and somewhat selective downturn followed a strong Monday in which the Dow had jumped by another 330 points, climbing above 26,000 in the process.
As to the selling, it really did not abate much as we moved into the afternoon, with the Dow staying range-bound with a loss in the 100-points area. The small- and mid-cap names also withered somewhat. But there was no serious selling, as the market, which had a banner first quarter--the best for any three-month stretch in a decade--seemed ready to head higher at any moment, especially if there is a new inducement to buy. Such an argument for additional market gains could be satisfied by a successful trade deal with China or by better-than-expected first-quarter earnings. At this point, the former seems more likely than the latter.
Meanwhile, the equity market continued to drift as the afternoon progressed, with the NASDAQ holding increasing gains, while the Dow continued in the minus column, albeit somewhat less than in the morning. As for other influences yesterday, the U.S. Census Bureau reported that February orders for durable goods had declined following three straight monthly increases. However, excluding the transportation category, the result was a token 0.1% increase. Capital goods orders, meantime, also slipped. Overall, the data elicited little change in mood on the Street.
The market then continued to show a divided pattern as the afternoon drew to a close, with the Dow holding in the minus column, while the NASDAQ continued to gain traction, finally ending the session ahead by 20 points. The Dow was lower by 79 points and the S&P 500 Index broke even. The smaller indexes closed nominally lower on the day. All told, it was a mixed performance by a stock market that seems poised to go higher in the weeks to come unless there is a plethora of unsettling developments on our shores or overseas.
Looking out at a new day now, we see that the markets were higher in Asia after the split decision in the United States, on optimism about a U.S.-China trade deal. In Europe, after some gains yesterday, the bourses are tracking upward on positive trade news so far this morning. Also, oil prices, up yesterday, are gaining again early today, while U.S. Treasury notes, off in yield yesterday, are climbing so far today. Finally, on this likely sparse day for key scheduled economic reports, the U.S. equity futures are showing early sharp increases on trade optimism.
