After the Close
The equity market headed higher this morning, but ended on a generally mixed-to-weaker note. At the close of trading, the Dow Jones Industrial Average was down 37 points; the broader S&P 500 Index was off four points, but the NASDAQ was higher by 18 points. Market breadth showed a soft session, with decliners ahead of advancers on the NYSE. From a sector perspective, the consumer cyclical names and technology stocks pressed ahead, while the energy and utility issues retreated.
Meanwhile, there was just one economic news item released this morning. Specifically, wholesale inventories increased 0.2% during the month of March, which was in line with the consensus forecast. Tomorrow we get a look at import and export prices for the month of April, and the Energy Information Administration’s weekly petroleum status report. On Thursday, the pace picks up with the release of the April Producer Price Index, and the latest weekly initial jobless claims. These reports, which track the changes in inflation and employment, will likely be closely watched by traders following the Federal Reserve’s recent monetary policy meeting.
Elsewhere, in the corporate arena, a handful of companies weighed in with their results this morning. Specifically, shares of Marriot International (MAR) moved up after the lodging operator delivered a solid report and offered an encouraging outlook. In addition, Valeant Pharmaceuticals (VRX) surged after the widely followed company posted a better-than-anticipated set of numbers. After the market closed, we heard from Dow component Disney (DIS – Free Disney Stock Report).
Technically, the stock market tested some new high ground today, as the S&P 500 Index moved above the 2,400 mark. Nonetheless, the market pulled back, suggesting that traders may need some time to get comfortable with these levels. With the earnings season largely over, the next catalyst that might push stocks higher over the coming months could be the potential for infrastructure spending or tax reform. – Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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Mid-Day Update - 12:20 PM EDT
After the indexes finished yesterday modestly higher, the bulls extended the momentum into Tuesday morning. The S&P 500 and NASDAQ each set intraday highs, though the former briefly slipped into negative territory after 11 A.M. (EST). The Dow, meanwhile, has traded in a tighter band throughout the session. Although it has seen consistent momentum from Apple (AAPL - Free Apple Stock Report) and its banking components, recent laggards like Verizon (VZ - Free Verizon Stock Report) and International Business Machines (IBM - Free IBM Stock Report) are muting wider gains for the blue chip index. Unlike yesterday, strength in small-cap trading is helping to offset directionless trading of the mid- and large-cap equities.
While the morning’s optimism was mostly due to overall enthusiasm related to what has been a solid showing on the earnings front, early sentiment may have also been boosted by steady April job opening data. That metric is a key factor in the Fed’s thinking, and revealed that job openings remained near the high level set in March. Elsewhere, in the oil market, U.S. crude remained under pressure as high inventory levels and uncertainty that OPEC can ease the global supply gut stoke investors’ concerns.
Meanwhile, corporate earnings season is coming to a close. Three-quarter of the companies that have already reported results in the S&P 500 have beaten bottom-line estimates, while two-thirds eclipsed sales forecasts. Still, there are several corporations yet to reveal their quarterly performance. After the market closes, Walt Disney Co. (DIS - Free Walt Disney Stock Report) will update investors on its fiscal second-quarter (ended March 31st) results. Although the company likely benefited at the box office, with Star Wars: Rogue One and the live-action Beauty and the Beast both grossing over $1 billion internationally, investors are primarily concerned with sports network ESPN, where subscribers totals have eroded in recent years. Looking out, a group of major retailers leads the rest of the companies set to report over the balance of the week.
So, with market breadth roughly even heading into the afternoon, we expect the indexes to remain range-bound through day’s end. News from the Federal Reserve and economic policy updates from Washington will begin to play a larger role in trading going forward. Regional Presidents from the central bank will make statements through Friday, after which attention will turn to the June FOMC summit. The business beat ought to help determine expectations up until the meeting, as new data on import prices, jobless claims, and consumer sentiment, among others, are scheduled for release. – Robert Harrington
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before the Bell
Wall Street began the second week of May on a slight early down note, notwithstanding a momentary buying flurry in the NASDAQ, which established yet one more record high, surpassing 6,100 in the process, on some celebration that Emmanuel Macron had won the Presidency of France over far right candidate Marine LePen. But that joy was just momentary, and as we past the one-half hour mark of trading, the Dow Jones Industrial Average had settled into a small loss of some 30 points. The other large-cap indexes also were lower, but modestly, as well.
Meanwhile, running counter to the early market backtracking was Apple Inc. (AAPL - Free Apple Stock Report), with that technology stalwart, which weakened briefly after its quarterly earnings release, climbing to another all-time high above $150 a share. It was less than a year ago that Apple was trading for under $90. But the issue is clearly back in the good graces of investors. Overall, though, the mood was more tentative, although any selling seemed halfhearted at the outset of the session.
The market then continued to hold at modestly weaker levels into the noon hour, with the losses in the three major averages capped somewhat by additional strength in Apple, with that tech icon, which is listed on the Dow and included, as well, in the S&P 500 Index and the NASDAQ, soaring past 153 in midday trading, boasting a gain at that juncture of some $4.00 a share. Meanwhile, the market's overall weakness was underscored by the weak advance-decline ratio in the NYSE and the aggregate softness in the 10 large equity sectors.
The market's modest slump then continued into the afternoon, with the averages staying just below the neutral line into the middle stages of the afternoon, with merger news the lone issue of note save for the recent election in France. Elsewhere, earnings news is lessening as the days go by, with Mondays often being a slow day in that regard irrespective of the calendar. Overall, though, we expect fewer companies to be reporting their results this week than over the past fortnight.
Meanwhile, stocks firmed up a tad into the close, so that each of the major large-cap indexes ended matters on the plus side of the ledger, albeit barely. Still, there remained fewer advancing issues than declining stocks on the Big Board, with more groups ending down than up. Strength was seen in the technology and energy stocks, as Apple ended ahead by more than $4.00, while oil closed ahead by just over $0.20 a barrel. Losers included the health care and financial stocks, with Goldman Sachs (GS - Free Goldman Sachs Stock Report) especially weak.
All told, the Dow gained five points, while the NASDAQ rose two points. The S&P 500 Index was virtually flat at the close, meantime, gaining a tenth of a point, and the Russell 2000 dropped five points. Most mutual funds retreated on the day, especially those in the smaller-cap area, while Treasury yields climbed modestly, rising to close to 2.40%. On the whole, it was a day of little action and minimal movement, especially after the expected Macron victory was priced into the equation.
Looking out to a new day now, we see that stocks in Asia were mixed in overnight dealings, while on the Continent, Europe's leading equity indexes are thus far trading higher. Oil quotations in New York are up slightly; Treasury yields, up modestly in trading yesterday, are now moving a bit higher again; and U.S. equity futures are showing gains ahead of the opening on Wall Street and some speeches by Federal Reserve members. So, after a mixed-to-lower day in New York yesterday, the equity market seems set to open somewhat higher. – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
