After the Close
The stock market made further progress today, extending the gains logged over the past several days. At the close of trading, the Dow Jones Industrial Average was ahead 71 points; the S&P 500 Index was up 11 points; and the NASDAQ was higher by 42 points. Market breadth was favorable, but not overly so, as advancers were just slightly ahead of decliners on the NYSE. From a sector perspective, the technology issues and select consumer names advanced sharply, while the energy stocks retreated. On a related note, the price of crude oil fell over 5%, falling back below the $50-a-barrel a mark. Here, OPEC and other oil producing countries recently agreed to extend that latest round of production cuts for an additional nine months, but investors seemed uninspired.
Traders received some economic news this morning. Specifically, initial jobless claims came in at 234,000 for the week of May 20th, which was a relatively favorable reading, and suggests that the nation’s employment situation remains in good shape. Tomorrow, durable goods orders for the month of April are due out. We will also get a look at the second estimate for first-quarter GDP. Further, the University of Michigan’s consumer sentiment survey will be finalized for the month of May.
Meanwhile, a few widely followed corporations delivered earnings reports over the past 24 hours. Specifically, shares of PVH Corp. (PVH) moved up in response to a solid report and an upbeat outlook. Further, shares of Best Buy (BBY) soared after the electronics retailer put out an encouraging set of numbers.
Technically, the stock market has performed well lately. With today’s trading, the S&P 500 Index is back above the 2,400 mark. It remains to be seen if the bulls can extend the recent rally. Some on Wall Street may be feeling optimistic that the Trump Administration will be able to make progress on its pro-business agenda. Further, the recent trip to the Middle East did result in a large arms deal with Saudi Arabia, and that did boost the defense issues. – 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 - 11:55 AM EDT
Another day, another record--actually two records, as both the S&P 500 Index and the tech-driven NASDAQ have broken through to all-time highs this morning. On point, the latter index, which closed comfortably above 6,150 yesterday, soared to a gain of some 20 points at the outset of trading, while the S&P 500, which ended matters yesterday just above 2,400 in a late charge, rose a handful of points early on. Not to be outdone, the Dow Jones Industrial Average quickly moved out to a gain of better than 50 points, but it remained about a hundred points from an intraday record at that point.
Helping the bulls get rolling today was yesterday's release of the minutes from the May FOMC meeting, at which time the Federal Reserve indicated that it plans to trim its balance sheet as part of a gradual withdrawal from past aggressive easing maneuvers. The bank's plans, along with some further monetary tightening, figure to be sufficiently gradual so as not to disturb the very orderly economic progression now in place. Investors also are keeping an eye on oil prices after OPEC agreed to extend production cuts by nine months. Crude for July delivery fell back on this news, trading just incrementally lower, however.
So, stocks rallied at the open and the market built on those gain as we passed the half hour mark of the trading day. And so far today, in contrast to yesterday, the smaller-cap indexes, notably the S&P Mid-Cap 400 and the Russell 2000, are rallying in kind, with the former leading the way early. The bullish drumbeat then continued as the morning progressed, with the Dow advancing toward 21,100, while the other two large-cap indexes moved a bit further up the ladder. The session thus far would seem to have all the trappings of another solid day for the bulls.
In economic news, meanwhile, jobless claims rose slightly in the latest seven-day period. However, the number of Americans filing for benefits last week was less than expected, while the four-week moving average of claims fell to a 44-year low. That would imply a further tightening of the labor market, and builds the case for an interest rate hike being voted for at next month's FOMC meeting. In all, claims rose by just 1,000 last week, to 234,000. That small increase followed three straight weeks of declining jobless claims. The latest data seemed to have no material influence on stocks, though, as the market seems intent on rising still further for now.
Breaking the advance down, we see that gaining issues hold better than a two-to-one lead on declining stocks, while just about all of the 10 equity groups have been pressing higher, with notable gains in the financials, industrials, technology, and the heretofore troubled telecom stocks. As we approach the noon hour in New York, we also are seeing gains in the retailers, with Best Buy (BBY) shares up sharply, while low-priced Sears (SHLD) stock is firming. All told, at this hour, the Dow is ahead 56 points; the S&P 500 is up nine points; and the NASDAQ is better by 34 points. – Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before the Bell
Well, it took a week, but both the Dow Jones Industrial Average and the Standard and Poor's 500 Index had managed to wipe out the losses of the prior five trading sessions by mid-morning yesterday. On point, after the Dow had tumbled by nearly 400 points on Wednesday May 17th, in the wake of further unsettling news about the Trump Administration's dealings with Russia and assorted other contentious issues, the stock market staged a four-day rally beginning on Thursday. Yesterday morning's added comeback took those two indexes back up to where they had been just over a week ago.
True, the latest early rally was not substantial, with the Dow generally holding in the plus 30-to-40-point range, while the S&P 500 was ahead by a couple of points. Importantly, though, from a psychological standpoint, this latter index had tiptoed back above the 2,400 level. The NASDAQ, too, was higher, rising a little more in percentage terms at midday than the other two composites. The small-cap Russell 2000 and the S&P Mid-Cap 400, meanwhile, were up proportionately more at that time. Gainers also held the lead over declining issues, as the noon hour arrived in New York.
As to influences on this middle trading day of the week, the National Association of Realtors reported that sales of existing homes had edged down in April, on a sequential basis, due largely to stubbornly low supplies of saleable properties. In all, sales came in at an annual rate of 5.57 million homes. That was down from 5.7 million properties sold in March. However, the median price of a home rose 6.0% in the last year, marking the 62nd straight month of year-over-year gains. Aside from housing, all eyes that were not on Washington were focused on the 2:00 PM (EDT) release of the Federal Reserve's minutes from its recent FOMC gathering.
Meanwhile, although the President is overseas, the wrangling in Washington goes on, with Congress trying to gauge just how much damage has been inflicted on the White House by these contentious affairs. Now, there promises to be a fight over a bill budget that faces a lot of scrutiny going forward. Also, there is the Fed. Here, the aforementioned FOMC minutes showed no indications of backing away from a likely June interest rate increase. Otherwise, the earnings parade continues, with retailer Tiffany (TIF) showing a sharp decline in price following the release of disappointing fiscal first-quarter results.
The solid first-half of the trading day then continued into the early afternoon, with just a few brief headwinds along the way. When the minutes were released and they did not surprise investors, as the bank again signaled that a June rate hike was still in play, the market's resolve stiffened a little, with the Dow's gain moving past 70 points in mid-afternoon, before backtracking a little. The stock market abhors surprises, and as the minutes came in about as expected, there was not reversal of note. However, the day's action became more tilted toward the large-cap stocks, as the Russell 2000 went negative for a time.
As the final few minutes arrived, the Dow again flirted with the 21,000 mark, while the S&P 500 stayed above 2,400. The NASDAQ, meantime, held above 6,150, while the small-cap Russell 2000 went in and out of the red. At the close, there was a modest buying spurt, so that the Dow ended higher by 75 points (at 21,013); the S&P 500 was better by six points (at 2,404); the NASDAQ strengthened to close matters ahead by 24 points (to 6,163); and the Russell 2000 was ahead by two points, as gaining issues managed to top decliners on the Big Board.
Looking ahead to the penultimate trading day of the week, and with five straight wins to their credit, the bulls saw some positive action in Asia overnight, while on the Continent, the bourses are posting gains in early dealings across the pond. Elsewhere, the price of oil is off a little; Treasury yields are down; and most metals are holding steady. Our futures, meantime, are suggesting a nice uptick to the new trading day. Little of note, meantime, save for some Fed speakers is on the docket today, as the bulls strive to make it six up days in a row. – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
