After The Close
The U.S. stock market put in a mixed, but selectively constructive session today, as traders seemed less concerned about America’s international trade situation. At the end of the day, the Dow Jones Industrial Average was down 42 points, while the broader S&P 500 Index was ahead five points, and the NASDAQ was higher by 56 points. Market breadth was favorable, with winners ahead of losers on the NYSE. The technology, energy, and healthcare stocks displayed some leadership, offsetting softness in the telecom and basic materials issues.
Traders received a few economic reports this morning. Specifically, existing home sales dipped to an annualized rate of 5.43 million units in the month of May. Analysts had been looking for a better showing. In the energy patch, according to the EIA, crude oil inventories declined by 5.9 million barrels during the latest recorded week. Tomorrow, we get a look at the weekly initial jobless claims, as well as a report on economic conditions in the greater Philadelphia region. In addition, the Conference Board’s Leading Indicators report for the month of May is due out.
In corporate news, a few high profile companies posted their results over the past 24 hours. Specifically, shares of Oracle (ORCL) moved lower, after the technology giant provided a weaker-than- expected outlook. Shares of FedEx (FDX) lost some ground, even though the company delivered a respectable report. In the M&A space, shares of Twenty-First Century Fox (FOXA) rose on acquisition-related news.
Technically, the stock market remains volatile, as traders have no shortage of issues to turn their attention to. Further, the summer months are approaching, and that sometimes can have an impact on the markets.
— 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
Stocks continue to be affected by word of fresh tariffs either being imposed or threatened by the United States and its major trading partners. Tuesday’s trading reflected that trend, after President Trump threatened fresh levies on imports from China if that nation chose to retaliate against an earlier round of U.S. tariffs. The news sent the Dow Jones Industrial Average tumbling to a loss of 287 points.
The Dow’s performance has been dampened more this year than the other major averages by the trade disputes because many of its 30 component members are very large companies that conduct a sizable amount of international business. The S&P 500, with its greater diversification, has managed a small gain so far in 2018. Meanwhile, the NASDAQ, with the secular growth themes of its big-name companies, and the Russell 2000, with smaller names whose operations are focused domestically, have been relatively unscathed.
The silver lining to yesterday’s poor showing was that the market finished off of its lows of the session. That seems to be the trend lately after a series of weak openings, with investors apparently believing a resolution to the disputes on trade and tariffs may still be within reach, or that the situation remains manageable if no further escalation occurs.
President Trump appears to be implementing a ``no pain, no gain’’ approach to extract trade concessions with major trading partners in conjunction with a feeling that the U.S. has the stronger hand. The feeling that the U.S. is righting wrongs is also in play. At this point, though, the countries involved have shown few signs of backing off of their positions.
Meanwhile, there is plenty of news on individual companies. Disney (DIS – Free Walt Disney Stock Report) has increased its offer to buy many of Twenty-First Century Fox’s (FOXA) assets. Comcast (CMCSA) had made a competing bid for the assets.
There was also word of a change in the composition in the Dow Jones Industrials. Walgreens Boots Alliance (WBA) will replace General Electric (GE – Free General Electric Stock Report) later this month, marking the end of an era.
In other markets, OPEC is meeting in Vienna to discuss the possibility of boosting oil production. The cartel, together with Russia and other major producers, has withheld 1.8 million barrels a day of supplies over the past year and a half to bring down global inventories. But problems in Venezuela, and the likelihood of sanctions diminishing Iran’s exports, have led OPEC to reassess the situation.
Looking ahead to today’s trading, the markets appear to be shrugging off gloomy news on trade and tariffs, and are pointing to a somewhat higher opening.
— Robert Mitkowski
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
