After the Close
The stock market made little progress today, after being lower most of the session. In all, at the close of trading, the Dow Jones Industrial Average was off six points, while the S&P 500 Index and the NASDAQ were ahead slightly. Meanwhile, market breadth was negative, as losers outnumbered winners on the NYSE. Further, the major equity sectors were divided. The energy and basic materials issues weighed on the market, probably on concerns about lower crude oil prices. Of note, the world’s most widely traded commodity sank roughly 5% to just over $45 a barrel in New York. In contrast, healthcare and consumer non-cyclical names traded higher.
Traders received a mixed batch of economic news today. Specifically, the nation’s trade gap narrowed to $43.7 billion in March, where analysts had been looking for a less favorable showing. Factory orders increased 0.2%, which was a bit less than had been anticipated. Finally, on the employment front, initial jobless claims fell to 238,000 for week of April 29th, where a higher number had been expected. On a related note, traders are likely looking ahead to tomorrow morning when the Government releases its April employment figures. That issuance will be closely watched by Wall Street, and some traders may have sat on sidelines today in advance of the news.
Meanwhile, the first-quarter earnings season continues to dominate the news. We recently heard from Facebook (FB). Shares of the social media leader were off today, even though the company delivered better-than-expected results. Exxon Mobil (XOM – Free Exxon Stock Report) put out a respectable report last Friday, but the oil giant’s stock retreated today on concerns about commodity prices.
Technically, the stock market has been moving sideways for the past week, or so. It remains to be seen if stocks will move higher from here, especially as the earnings season fades. Tomorrow’s jobs report could play a role here. – 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 - 12:00 PM EDT
Following a trio of undistinguished performances to start the week on Wall Street, the stock market opened briefly to the upside this morning on optimism about earnings, legislative prospects in Washington, and the economic outlook. Specifically, on the data front, jobless claims fell by 19,000 in the latest week, which was more than expected, and the U.S. trade deficit narrowed to $43.7 billion in March. That was less than forecast. As to the legislative outlook, the Republicans in the House have apparently set up a vote on the health care law. Their goal is to replace much of the Affordable Care Act. Regarding earnings, the results continue to impress.
So, stocks rallied initially, but the gains were held in check, in part, by uncertainty ahead of tomorrow morning's report on non-farm payrolls and the unemployment rate. In fact, after a few minutes, the bulls had given up their latest rally attempt, and the indexes had moved lower. As before, though, the selling was not intense, with the loss in the Dow Jones Industrial Average, for example, holding mostly in the 20-point-to-30-point range. Also pulling stocks down was a formidable drop in energy stocks, with that group losing some 1.5% on further declines in crude oil prices.
In all, oil, which has now fallen to about $47 a barrel, is at its lowest level in some five months. The general consensus is that this is an oversupply concern. However, some are questioning whether this decline in crude might also signal concerns about the pace of economic growth. Our sense here, though, is that growth, a worrisome 0.7% in the opening span, should comfortably surpass 2% in the current quarter and remain in that range during the second half. Meanwhile, in Washington, the Republican-led House likely will be voting on the new health care legislation later today.
As the morning continued, the losses narrowed, with the S&P 500 Index and the NASDAQ moving into the black as the second hour of trading began. The losses in the Dow, meantime, remained modest. It would seem as if the market is in a period of watchful waiting, with the items of note being the pending health care vote and tomorrow's jobs report. In the meantime, there also is the focus on oil and commodities. Overall, though, there is not too much going on this morning, so moves in the market have been relatively small to this point.
All told, as we pass the noon hour in New York, the market was sitting with incremental losses. On point, the Dow was off 20 points; the S&P 500 Index and the NASDAQ were each virtually flat, with just nominal gains, while the S&P Mid-Cap 400 and the small-cap Russell 2000 were hanging on to moderate deficits. Further breaking the action down, we see that six of the 10 leading equity groups were lower in price, led down by energy and basic materials, while only the consumer non-cyclical sector was showing more than nominal strength.
Finally, losing stocks were ahead of winning stocks on the Big Board by a ratio of better than two-to-one. The differential on the NASDAQ, however, was much narrower, suggesting some relative strength in that area on this unprepossessing day so far for U.S. equities. – 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
After a pair of indecisive stock market sessions on Monday and Tuesday, Wall Street began the middle day of the trading week in possession of modest losses, which were driven primarily by a pullback in shares of iconic technology behemoth Apple Inc. (AAPL – Free Apple Stock Report). Although that tech darling did well on the bottom line, surpassing profit expectations during the latest quarter, its iPhone sales were a tad light, as were revenues. So, the stock fell, taking the Dow Jones Industrial Average and the NASDAQ down with it. Overall, though, the stock market continued to handle adversity quite well.
Meantime, the earnings reporting season has been a solid one, with more than 75% of the companies domiciled in the S&P 500 posting income levels that exceeded consensus forecasts. Also, sales have topped expectations in some 70% of the cases. In other early influences, the Federal Reserve shared top billing with earnings, as the central bank was concluding its latest FOMC meeting (see below). Few market participants expected the central bank to increase interest rates at that time, and the FOMC statement, issued at 2:00 PM (EDT) yesterday, would confirm that expectation.
Additionally on traders' minds was the situation in Washington, where the latest efforts to repeal and replace the Affordable Care Act was running into apparent difficulty in Congress, where a group of centrist Republicans were threatening to thwart moves in that direction. Meanwhile, in other news, the U.S. private sector created 177,000 jobs in April, according to a report issued by Automatic Data Processing (ADP). That figure was in line with expectations. The ADP report is a prelude to the government's survey on non-farm payrolls, which will be out tomorrow morning.
Finally on the economic front, the Institute for Supply Management reported that its survey on non-manufacturing had risen to a reading of 57.5 for the month of April, a total that exceeded both expectations of 55.8 and March's tally of 55.2. Also, of note, car sales disappointed, with volume slipping in the latest month. On the whole, however, it is earnings that are carrying the day, and that helps explain while stocks are hanging in there for the most part as we move further into 2017. And that again was the case yesterday morning, with even Apple's decline moderating as the session moved along.
Meanwhile, as the morning wound down and we began the afternoon, the losses narrowed, with the Dow, once off some 75 points, cutting that deficit to single digits for a time. However, the NASDAQ, pressured by some tech issues, held onto more substantial losses. Things then did not change all that much leading up to the Fed mid-afternoon statement, with the Dow weakening a little more, but with the other indexes holding their modest deficits. The Fed meeting then ended, with interest rates standing pat, as most had expected. The market reacted little initially to this decision.
Little of note then occurred during the concluding two hours of trading, with the major averages remaining lower throughout, save for some occasional tiptoeing into the black by the Dow. The small-cap Russell 2000 and the S&P Mid-Cap 400, however, remained securely in the loss column throughout, as did the tech-laden NASDAQ. Interestingly, though, the losses in Apple moderated as the afternoon wound down, with that issue edging back toward breakeven as the final bell sounded. In all, at the end of the session, all but the blue chip composite, a slight winner, were in the loss column.
Now, a new day begins, and there figures to be some skittishness ahead of tomorrow's non-farm payrolls report, which is due out an hour before equity trading resumes. Ahead of all this, stocks in Asia were lower in overnight dealings, while in Europe, the Continent's bourses are now higher on earnings optimism In addition, oil is down again; interest rate yields on U.S. Treasury securities are up at this hour; and our equity futures are higher. So, assuming no dour surprises on the earnings side, the U.S. stock market should start the session with gains. – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
