Mid-Day Update - 12:25 PM EDT
Before the Bell
The drive for four, that is, four straight wins by the bulls this trading week, got under way early yesterday, and successfully so. In all, Wall Street did, in fact, manage to post another wire-to-wire win, with the Standard and Poor's 500 and the tech-heavy NASDAQ securing all-time highs early in the session. The Dow Jones Industrial Average also moved briskly ahead, and further surpassed the 21,000 mark, but fell short of an intraday record high. In the process, the stock market has now made up all of the setback suffered last Wednesday when stocks plunged on worries about the future of the Administration in Washington.
The mood on the Street has improved, meantime, as the President's trip abroad--to the Middle East and Europe--has been generally well received. And although unsettling news is still coming out regarding investigations of the White House, the better reception that has greeted the President has turned the mood more positive. That, plus a supportive report by the Federal Reserve on Wednesday, as the central bank released the minutes from its May FOMC meeting, and strong earnings and economic support, have been helpful in mollifying the recently chastened bulls.
So, stocks rallied, with the Dow gaining more than 50 points at the outset of trading and gaining some moderate momentum in the hours that followed. Still, the Dow was not the standout performer. That award went to the NASDAQ, which buoyed by strength in technology stocks, soared by almost 1% on the day, easily eclipsing the more modest increases by the Dow and the S&P 500 Index. The smaller-cap composites, however, struggled again, with earlier gains in the S&P Mid-Cap 400 and the small-cap Russell 2000 (in particular) fading as the afternoon progressed, although both would end higher.
Also helping sentiment, in addition to Mr. Trump's trip, the Fed, and earnings (which were aided, for a change, by improvement in the retailing group), was a constructive economic report, as the Labor Department reported that jobless claims edged up by just 1,000 in the latest week, a lesser increase than had been forecast. Also, the four-week moving average of those claims declined to a 44-year low in the latest seven-day span. This is consistent with the overall improvement in the jobs outlook, and should further encourage the Fed to raise interest rates at its mid-June FOMC meeting.
The market's upward move then continued into the close, with just a minor softening as the final bell sounded. All told, the Dow retained 70 points of a session-best gain of about 100 points; the S&P 500 Index held onto 11 points of its 14-point earlier advance; while the NASDAQ kept 42 points of a one-time increase of 54 points. Notably lesser advances were secured by the Standard and Poor's Mid-Cap 400 and the small-cap Russell 2000. Overall, gaining stocks led losing issues by just a razor-thin margin on the Big Board. Among the major groups, technology again did well, while energy lagged.
Looking at the final trading day of the week, as the bulls seek to make it five out of five up days over this latest five-day stretch and seven winning issues in all, we see that stocks were mostly lower overnight in Asia, while in Europe, the key bourses are tracking downward as well. Also of note, metals prices are up, led by gold; oil prices, which fell yesterday, are off by pennies a barrel; and Treasury yields are down a bit. Meantime, our futures are showing small losses as we make our way to live trading shortly. Of note, a report on consumer sentiment will be out after the opening bell. Finally, the Commerce Department has just released revised first-quarter GDP figures, and the tally was raised from the initial report of a 0.7% increase in the first two months to a gain of 1.2%. Expectations had been for a more modest upward revision, to 0.9%. As before, we estimate about a 3% GDP gain in the second quarter. - Harvey S. Katz
