After The Close
The stock market began the new week on Wall Street with a mixed showing. At the end of the day, the Dow Jones Industrial Average was down about 84 points; while the S&P 500 Index was up three points; and the NASDAQ was higher by 15 points. Market breadth showed a divided session, with decliners just about even with advancers on the NYSE. From a sector perspective, the energy and consumer names managed to press ahead, while the defensive utility issues displayed some weakness.
It was a light day for economic news. Nevertheless, it is worth mentioning that factory orders declined 0.5% in the month of February. This figure was in line with expectations and did not come as much of a surprise. Tomorrow, few economic reports will be released, as well. However, on Wednesday the pace should pick up, with the posting of the latest monthly consumer price index (CPI) and the minutes from the most recent FOMC meeting are set to be released.
In the corporate arena, it was a quiet day, with no major quarterly profit reports taking the spotlight. However, it is worth noting that shares of Boeing (BA – Free Boeing Stock Report) traded lower, on news that the aircraft manufacturer will temporarily reduce production of the 737 Max plane. Meanwhile, the first-quarter earnings season will soon start up, with several major banks reporting their numbers in the days ahead.
Technically, stocks have made notable progress so far this year. The next big catalyst for equities will likely be the first-quarter earnings season. As usual, investors will be closely looking at the guidance being offered by the major corporations.
- 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 first full trading week of April was a productive one for those long equities. Emboldened by some positive sentiment regarding the trade negotiations between the United States and China and some encouraging data on the U.S. economy, including the latest labor market data (more below), investors’ appetite for risk increased again after a modestly volatile conclusion to the month of March. For the five-day stretch, the Dow Jones Industrial Average, the NASDAQ Composite, and the S&P 500 Index advanced 1.9%, 2.7%, and 2.1%, respectively. The tech-heavy NASDAQ once again is within a stone’s throw of the psychologically significant 8,000 level. The solid start to April for the aforementioned averages comes on the heels of an impressive first-quarter performance, one of the best first 90-day stretches for the U.S. equity market in several years. The NASDAQ Composite was the big winner in the first quarter, fueled by a nice rebound for the technology stocks after a disappointing performance in the final quarter of 2018.
On Friday, the major equity averages delivered another positive performance, with respective advances of 40, 47, and 13 points for the Dow 30, NASDAQ, and the broader S&P 500 Index. The index of 30 bellwether companies started out in lackluster fashion, but was able to finish the session to the upside. In general, the buying was broadbased, with the small- and mid-cap sectors also producing solid gains. The small-cap Russell 2000 finished the bullish session with a gain of nearly 1%. All of the 10 major equity groups ended in positive territory, with the leadership provided by the energy stocks, which got a boost from a rise in oil prices both domestically and in Europe. Advancing issues outpaced decliners by nearly a three-to-one margin on the Big Board and more than two to one on the NASDAQ.
The biggest news on Friday came from the business beat. Before the market opened, the Labor Department reported that nonfarm payrolls increased by a better-than-expected 196,000 positions in March. It was a marked improvement over the 33,000 gain recorded in February. The unemployment rate held steady at 3.8% and the average hourly wage increased by four cents. The average hourly wage, which is closely monitored by the Federal Reserve as a barometer for inflation, was up 3.2% over the last 12 months. The employment data were greeted positively by investors and hence the noted positive showing for the U.S. equity market.
Meantime, trade negotiations between the United States and China remain squarely on the minds of investors. Another round of talks between the world’s two-largest economies in Washington D.C. concluded on Friday. Although there was no clear timeline for trade resolution, both sides said progress was made and the two powers vow to continue talking via videoconference. President Trump said on Friday that he didn’t want to predict whether the world’s two biggest economies would reach a deal, but said the recent meeting was a success, and another step toward striking a deal and ending the bickering that has gone on since March 1, 2018 when the Trump Administration implemented its first round of tariffs against China. Also regarding trade, the President backed off his pledge to close the southern border to Mexico, but left on the table tariffs against Mexico, particularly on automobiles, if a resolution on migrants coming from Mexico can’t be reached. This bears close watching, as the market would likely not have a positive view on the placement of tariffs against Mexico as it would raise the prices of certain goods for American consumers.
Looking to the week at hand, we are still about a week away from first-quarter earnings season heating up. Thus, investors will continue to keep a close eye on trade, the Federal Reserve, and the latest data on the U.S. economy. On the latter front, the data will be light, but we will get the latest reports on producer and consumer prices, which are closely monitored by the central bank for clues about inflation. Speaking of the Federal Reserve, we also will get the minutes from its March FOMC meeting at 2:00 P.M. (EDT) on Wednesday afternoon.
With less than an hour to go before the commencement of new trading week stateside, the equity futures are indicating a flat to slightly lower opening for the U.S. stock market. So far overseas, the main indexes finished relatively flat overnight, while the major European bourses are turning in a similar performance, as trading moves into the second half of the session on the Continent. Meantime, this morning, the price of crude oil rose to its highest level this year on the back of improved U.S. economic data last week. Stay tuned.
- William G. Ferguson
