After the Close
The stock market put in another mixed session today, as traders digested the latest batch of corporate earnings reports and speculated about the Federal Reserve’s next move. At the close of trading, the Dow Jones Industrial Average was ahead 34 points, while the broader S&P 500 Index was up slightly, and the NASDAQ was ahead modestly, as well. Market breadth was somewhat negative today, as decliners outnumbered advancers on the NYSE. The major market sectors were divided, as gains in the technology and healthcare stocks were offset by weakness in the energy and materials issues.
Meanwhile, traders received few economic reports today. However, total vehicle sales for the month of April came in a bit lighter than had been anticipated, and investors were not likely pleased with that news. Meanwhile, the FOMC’s two-day meeting began this morning and concludes tomorrow afternoon with and interest-rate decision and some prepared remarks. While few on Wall Street think the Fed will lift rates at this juncture (the odds are less than 5% according to consensus thinking), there is a chance some action will be taken in June. Also, of note, the Government will release the April employment report on Friday morning, and that may be keeping traders on the sidelines.
Elsewhere, the first-quarter corporate reporting season continues. Today we heard from a few Dow components. In the healthcare space, shares of Pfizer (PFE – Free Pfizer Stock Report) retreated after the drug giant posted somewhat mixed results. Things went better for Merck (MRK – Free Merck Stock Report), as that stock edged up in response to a solid release and an encouraging outlook. And tech giant Apple (AAPL – Free Apple Stock Report) issued results after the closing bell.
Technically, the stock market has been pressing ahead, after pulling back in March. The S&P 500 Index is quite close to the 2,400 mark, which will likely be a key area to watch. – 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 - 12:15 PM EDT
After opening higher, each of the major indexes spent most of Tuesday morning in a tighter band near their respective breakeven lines. The mixed session comes as developments from Washington DC appear to have taken a momentary backseat to March-quarter updates from Corporate America and speculation over monetary policy. The ongoing earnings season, as well as the Federal Reserve’s two-day FOMC meeting, are the main influences on this thus-far directionless day of trading.
On the earnings front, Apple (AAPL - Free Apple Stock Report) headlines a group of heavyweights preparing to file their quarterly reports. The tech giant is set to release results after the market closes, when investors will pay special attention to iPhone sales, which are expected to eclipse last year’s same-period 51 million sum. Other corporations set to reveal earnings in the coming few days include Facebook (FB), Kraft Heinz (KHC), and a handful of oil and gas industry components.
As for U.S. crude, the commodity was down $0.33 per-barrel on Tuesday morning. Though optimism was ostensibly bolstered by news that production in Russia has slowed and increased speculation that OPEC would be able to extend its six-month drilling limit, elevated domestic stockpiles remain a drag on trading here.
Meanwhile, the Federal Reserve began its two-day meeting on monetary policy today. While the central bank is not expected to raise interest rates during the current summit, as it did in March, investors are looking for some clarity on its near-term plan. Also of note is the group’s plan to pare its $4.5 trillion balance sheet. Though some recent economic updates have underscored a slowed-but-steady growth picture, we believe the Fed will continue on its path to tighten the reins two more times by the end of the year.
The rest of the week will offer updates on trade, productivity, and factory orders, among many others. But the biggest bit of economic news comes on Friday, when the jobs report for the month of April is published. The March filing was underwhelming, missing expectations due to particular softness in the retail sector, so an impressive showing to end the week would go a long way in bolstering the still-bullish outlook for the economy. Until then, and barring any splashes in the political arena, the market will mostly react to the slew of quarterly earnings and Fed-related developments. – 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
Following some eye-catching equity market gains to close out April, but some modest backtracking on Friday in the wake of news of a disappointing report on first-quarter gross domestic product, Wall Street began the new week in rather unimposing fashion with just nominal gains, save for the NASDAQ, which advanced notably at the outset. The market steadied on news on Sunday that negotiators for the two sides in Congress had reached a spending deal to keep the government from shutting down later this week. Now, the full House and Senate must agree.
Meantime, early trading volume was light, with whatever initial strength there was led by technology and financial stocks. In addition to the House and Senate, the President must agree on the accord just hammered out. As to other influences, stocks, after that initial nominal strength, faltered some after word was released at 10:00 AM (EDT) that manufacturing activity's growth had softened somewhat in April, with the Institute for Supply Management reporting a lesser rate of gain (54.8) in April than in March (57.2).
The mild slowing was orchestrated principally by a moderation in new orders for manufactured goods. Note that the companion survey on non-manufacturing from the ISM will be out tomorrow. But the big economic news of the week will be issued on Friday when the government reports on employment and unemployment for April. That is more of a market moving event. Going back to the manufacturing survey, the report indicated that 16 of the 18 industries surveyed reported growth in April, led by electrical equipment.
However, that overall improvement was apparently insufficient to mollify the bulls, who pulled back a little further, with the Dow Jones Industrial Average dropping back by some 25 points in mid-morning trading. However, when the bears could not establish very much in the way of momentum, the buying resumed in late morning, so that by the middle of the session, the market had a mixed look to it. Throughout the morning and into the afternoon, the rally attempt was led by the NASDAQ, principally on strength, in tech, and in particular, in Apple (AAPL - Free Apple Stock Report) shares.
The back and forth then continued into the afternoon, with Apple shares, a stock that is part of the Dow, the S&P 500, and the NASDAQ, leading the way with an eventual gain on the day of close to $3.00 a share. That movement came ahead of today's report of its quarterly results. Also of note was the government report yesterday morning of an unchanged reading on consumer spending and a slight uptick in personal income. Both of these results were for March.
As the day wound down, the Dow joined the NASDAQ, the S&P 500, and the small-cap Russell 2000 in the profit column until near the close, when some last minute selling pulled the blue chip composite into the red by 27 points. The NASDAQ, however, surged to another record, gaining 44 points, while the S&P 500 rose four points, and the Russell 2000 climbed almost seven points. Meantime, after the stock market close, a loss was posted by Advanced Micro Devices (AMD) causing that issue to sell off sharply.
Now, a new day dawns and as we look out at action thus far, we see that stocks were mixed overnight across much of Asia, while in early dealings this morning, the market is tracking higher in Europe. As to other market gauges, oil is up; U.S. Treasury yields are ahead a bit as the Federal Reserve prepares for its FOMC meeting today and tomorrow; and our equity futures are posting early gains ahead of the open. Thus, if things hold, we could be looking at a slightly higher opening when trading resumes this morning. – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
