After The Close
The stock market traded notably lower this morning, but rebounded dramatically in the afternoon. Some of the volatility likely had to do with concerns over the Administration’s international trade policies. The Federal Reserve’s course of action has also been a source of worry for some on Wall Street. At the close of trading, the major averages were mixed. The Dow Jones Industrial Average was ahead five points, after being off nearly 400 points, while the broader S&P 500 Index was down six points, and the NASDAQ was lower by 13 points. Market breadth suggested a divided session, with decliners slightly ahead of advancers on the NYSE. Most of the major equity sectors lost ground today, with notable weakness in the telecom, energy, and healthcare names. However, the technology stocks and the basic materials issues managed to move higher.
Several economic reports were released today. Specifically, the nation’s trade deficit shrank to $49.0 billion in the month of March, which was an encouraging development. In addition, factory orders increased 1.6% for the latest month, surpassing expectations. Elsewhere, the employment situation was also in the spotlight. Initial jobless claims came in at 211,000 for the week of April 28th, which was a bit better than had been anticipated. Tomorrow morning, the government will post its employment numbers for the month of April, and release will be watched closely by Wall Street.
In the corporate arena, the first-quarter earnings season is still in progress. Over the past 24 hours, we heard from a number of widely followed names. Of note, shares of Tesla (TSLA) declined after an erratic conference call left investors confused. Meanwhile, Kraft Heinz (KHC) stock advanced, after the packaged food company delivered a mixed release. Tomorrow, we will hear from China-based Alibaba Group (BABA).
Technically, the stock market remains quite volatile. Most companies have been delivering decent profit reports, but the bulls seem cautious.
— 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 seesaw week continued on Wall Street yesterday, as investors, fearful of what the Federal Reserve might say at the conclusion of its FOMC meeting later in the day, started the session irregularly to the downside. And the losses persisted as the morning moved along. The Dow Jones Industrial Average, a laggard this week, led the way lower, falling almost 100 points early in the day. In fact, the losses would have been materially more had it not been for a near seven-point gain in the shares of tech icon Apple (AAPL – Free Apple Stock Report). The company had impressed the Street the afternoon before by posting solid quarterly metrics.
What did gain early in the day was the tech-laden NASDAQ, which was boosted, as well, by Apple's rise. As to the economy, it had been a mixed Tuesday, as the ISM had reported a slower advance in manufacturing in April than in March. Still, this core sector was continuing to gain nicely. Meanwhile, the companion non-manufacturing survey also put out by the Institute for Supply Management is due out a little later this morning, as are figures on factory orders. Then, tomorrow, the government will issue the month's most critical report, as it supplies figures on non-farm payrolls. Expectations are that 197,000 jobs were added last month.
As to the market, the Dow's losses narrowed somewhat as the morning moved along, but more groups than not were lower, while advancers and decliners were about even on the Big Board. At the time all eyes were on the Fed, as its two-day FOMC meeting was drawing to a close. It was not a fear of what the lead bank might decide, as few expected an interest rate increase at the meeting, but rather what it might suggest for the future in its accompanying monetary statement. A hawkish statement might, in fact, send the bulls racing for cover. The bank then did the expected, voting to keep rates unchanged (more below).
The pessimism that drove the Dow down by nearly 100 points early, then resurfaced as we hit the noon hour with that composite again pushing down by nearly triple digits, with a case of the jitters hitting the market ahead of the FOMC's conclusion. Even the NASDAQ, once nicely higher on the day, dipped into the red by some 10 points. The Dow stayed lower until just after 1:00 PM (EDT), when a flurry of buying ahead of the FOMC decision lifted the blue chip composite narrowly into the black. The averages would go back and forth into the rate decision.
Regarding the Fed, the increasingly transparent central bank voted to keep interest rates unchanged, but did acknowledge that inflation was getting up close to the Fed's 2% target. Heretofore, it had maintained that inflation was remaining below that level. This more hawkish acknowledgement makes rate hikes in June and September very likely and an increase in December not unlikely. The stock market did little on this news, alternately rising and falling modestly in the next hour. So, as we entered the home stretch, the averages were, at best, grudgingly positive.
The market then weakened as the final hour moved into high gear, with the Dow again going negative on inflation and interest rate concerns. The selloff then intensified down the stretch, with the Dow losing some 200 points at one time, before ending the session off a still-onerous 174 points. Losses of 19 points and 30 points were tabulated, respectively by the S&P 500 and the NASDAQ, even as shares of Apple rose by 4.4%, or more than seven dollars. Breaking the day down, eight of the 10 leading sectors fell in price, with only basic materials and energy securing grudging gains, while losing stocks narrowly edged out winners on the NYSE.
Now, a new day is under way, and looking overseas, we see that stocks were mixed in Asia overnight, while in Europe, the bourses are trending lower, at this hour. Elsewhere, oil prices are up slightly after gains yesterday, while the yield on the 10-year Treasury note is at 2.95%, after ending matters at 2.96% yesterday. Finally, the U.S. futures market is signaling a higher opening today following the late-session selloff yesterday, and ahead of U.S.-China talks on trade.
— Harvey S. Katz, CFA
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
