Before The Bell
Another day, another bout of volatility. That would seem to be the common theme on Wall Street these days, as stocks move up and down depending on the ebb and flow of news that day--or even hour. On point, when the focus has been reopening the economy, as it was on Monday and Tuesday this week, equities have rallied, with the Dow Jones Industrial Average climbing past the 24,000 mark late Tuesday before some profit taking set in and pulled that composite back down somewhat.
The buying then commenced again yesterday morning, with stocks initially rising once more, if more grudgingly. However, after the Dow again climbed back over 24,000 early in the day, more selling ensued, with the blue chip index pulling back from a more than nearly a 160-point advance to a decline of 117 points, before some follow-up buying ensued that lifted the Dow to just over the breakeven mark by 1:00 PM (EDT). However, once more the tech-driven NASDAQ led the way with a 100-point rally. That index has clearly outperformed thus far this week.
As to influences in yesterday's session, two things were front and center. First, stocks were again being supported by greater efforts to restart the economy, with many more businesses partially or fully opening. However, even as there was this ongoing attempt to get a return to normality, ADP (ADP) reported a record drop in private sector payrolls for last month, with the total job losses rising to more than 20 million. Still, that was slightly less than had been forecast. Tomorrow, the government reports on April non-farm payrolls and issues the jobless rate.
The equity market would continue to move in a moderately positive fashion through the middle of the afternoon. Indeed, as late as 3:00 PM, the Dow Industrials would still be near the breakeven line, while the S&P 500 Index would be modestly in the green. Meantime, benefiting from further strength in technology, the NASDAQ would be ahead by more than 100 points. Then, just as we had seen the day before, the market would weaken down the home stretch, with the Dow, the S&P 500 and the Russell 2000 all ending in the red.
The move lower late in the day seemed to be a case of investors shying away from stocks ahead of this morning's jobless claims report and tomorrow's issuance on monthly non-farm payrolls. A weakened economy and worries about soaring debt from any new aid package also weighed on the minds of investors. That said, the NASDAQ would hold onto a 45-point gain for the day on the aforementioned gains in tech, especially in some high-profile names.
Now, a new days begins, and after yesterday's mixed to lower session, the equity futures edged upward in after-hours trading last night as traders awaited the just-released jobless claims. In that release, aggregate filings came to 3.169 million in the latest week, up from an estimate of 3.05 million. That report preceded by 24 hours tomorrow's survey on non-farm payrolls and April's jobless rate. As to the market's outlook this morning, the futures point to a nicely higher opening, as investors are apparently looking beyond the current dire news and ahead to the economy's hoped-for reopening.
– Harvey S. Katz, CFA
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
