After The Close
The stock market traded nicely higher earlier in the session, but pared its gains in the late afternoon. At the close of trading, the Dow Jones Industrial Average was still ahead 95 points; the broader S&P 500 Index was up nine points, and the NASDAQ was higher by 56 points. Market breadth was favorable, with advancers outpacing decliners on the NYSE. From a sector perspective, the technology names and industrial stocks some displayed leadership, while the consumer noncyclical issues and utilities weighed on the market.
There were no notable economic reports released today, and tomorrow will be a light day for news, too. On Wednesday the Producer Price Index for the month of April is due out, along with the latest monthly wholesale inventory numbers. For traders following the energy patch, the EIA will release its weekly crude oil supply figures on Wednesday, as well. On a related note, the price of crude oil moved above $70 a barrel at one point today, reflecting strong global demand and concerns that tensions with Iran, a major producer, could escalate in the coming weeks.
In the corporate arena, the first-quarter earnings season is still ongoing. Today we heard from a few widely followed names. Of note, shares of Tyson Foods (TSN) edged up after the food manufacturer delivered respectable results and provided upbeat guidance. Shares of Sysco (SYY) also rose after the food distributor delivered a decent report. Meanwhile, in M&A news, International Flavors & Fragrances (IFF) agreed to purchase Israel based Frutarom in a deal valued at $7.1 billion. Shares of IFF traded lower on the news.
Technically, the stock market continues to trade in an erratic fashion. Investors may be maintaining a cautious stance, while waiting for a better sense of direction.
– 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
It was another eventful five-day stretch on Wall Street last week, with the market averages turning in a mixed performance. The major indexes started the week with three down sessions, driven by worries about inflation and the possibility of more hawkish Federal Reserve later this year. The central bank at the conclusion of its two-day monetary left open the possibility of three more interest-rate hikes this year (the expectation is still two), and that weighed some on the equity market. But late in the week, Fed leaders walked back the likelihood of a more–hawkish-than-expected central bank this year and that, along with weaker-than-expected job creation figures and only modest wage growth brought the buyers back into the equity market. The market finished the seesaw week with a flurry of buying.
On Friday, as noted, the headline event was the latest report on the labor market. Specifically, the Labor Department reported that nonfarm payrolls increased by 164,000 in April (the consensus expectation was around 190,000 jobs) and the unemployment rate fell to 3.9%. But, what drove the market higher was the modest increase in wages, which eased concerns about inflation. In such environment, the Federal Reserve is less likely to be more aggressive in tightening the monetary reins, which is typically well received by equity investors.
The sense that inflation is still running at a very modest level—and the central bank will not have its hand forced to be more hawkish with monetary policy—gave a big boost to stocks on the final session of last week. For the day, the buying was broadbased, with advancing issues outnumbering decliners by a sizable margin on both the New York Stock Exchange and the NASDAQ, to the tune of three to one on the latter exchange. The Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index finished the session up 332, 121, and 34 points, respectively. The buying pushed the tech-heavy NASDAQ into positive territory for the week; the Dow was modestly lower. All of the 10 major equity groups finished Friday in positive territory, with the leadership coming from the technology, consumer (both discretionary and staples), and basic materials groups.
Looking to the new trading week, we will continue to get more quarterly earnings reports, but the pace of reporting will begin to slow. On the docket will be one of the Dow-30 companies, as entertainment giant Walt Disney (DIS –Free Disney Stock Report) is scheduled to release its latest quarterly results after tomorrow’s closing bell.
Meantime, the news from business beat will be rather light, but we will get data on producer and consumer prices, both of which will be highly scrutinized for clues about inflation. The pricing data, along with speeches from several prominent Federal Reserve leaders may have an impact on a market that continues to track the inflation situation.
With less than an hour to go before the commencement of trading stateside, the equity futures are pointing to a modestly higher opening for the U.S. stock market. Overnight, the main indexes in Asia finished to the upside, while the major European bourses are in positive territory as trading moves into the second half of the session on the Continent. Stay tuned.
— William G. Ferguson
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
