After the Close
The stock market delivered a highly fragmented performance today, as investors rotated out of energy names and into technology issues. At the close of trading, the Dow Jones Industrial Average was down 57 points. The broader S&P 500 Index was also off slightly. However, the NASDAQ managed to advance 46 points, which was impressive. Market breadth showed a divided session, as decliners outpaced advancers on the NYSE. Further, many market sectors retreated with sizable losses in the energy and financial names. Of note, the price of crude oil moved lower today, even though a recent report from the EIA showed inventories had declined a bit over the past week. In contrast, the technology sector displayed solid leadership. Further, investors were buying the healthcare stocks, which have been out of favor for some time.
Meanwhile, it was a light day for economic news. However, existing home sales rose to an annualized rate of 5.62 million units during the month of May, which was a better reading than had been expected. Tomorrow, we get a look at the weekly jobless claims. In addition, the FHFA Housing Price Index (measures the value of single family homes) will also be released.
Elsewhere, a few corporations delivered their financial results over the past 24 hours. Most notably, shares of FedEx (FDX) firmed up in response to a solid report. In addition, shares of Red Hat (RHT) soared as investors reacted to a better-than-expected release.
Technically, equities have been holding up quite well lately, even if investors seem to have concerns on several fronts. – 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 - 11:50 AM EDT
Right around the noon hour on the East Coast, the major stock averages are diverging as a 27-point rise on the NASDAQ contrasts with a 42-point pullback on the Dow Jones Industrial Average. Meantime, the broader S&P 500 is lower by a couple of points. Market breadth confirms the trends on the major indexes, with advancing issues ahead of decliners on the NASDAQ, but the opposite holding true on the Big Board.
In economic news, Wall Street this morning received some surprisingly strong data on the housing market, when word came that sales of existing homes rose 1.1% in May. The expectation had been for a decline of .5%. Moreover, the average price of a resale rose to 5.8%, to an all-time high of $252,000.
The higher prices are welcome news for sellers, but are indicative of a shortage of homes for sale. There is currently 4.2 month of supply available, whereas six months is considered normal. Low mortgage rates and healthy employment levels will probably remain supportive of housing, which is important underpinning for the economy.
The news isn’t as bright in the oil market, although the tone today is not as bearish as has been the case in recent weeks. Energy Department data showed a sizable decline in inventories of crude oil and gasoline, but oil quotations are modestly lower, after initially rising a bit when the data were released. There seems to be a feeling on the part of some traders that the inventory drawdowns could have been bigger.
In terms of market sectors, energy is the laggard again today. Healthcare is clearly in the lead, suggesting a somewhat defensive bias to trading.
In corporate news, bellwether shipper FedEx (FDX) reported better-than-expected revenues and earnings for its latest fiscal quarter. Its stock is moderately higher as a result.
Broadly, with stock valuations at high levels, investors appear at least in part to be waiting for further signals to remain bullish. That could come in the form of second-quarter corporate earnings and related guidance, which will begin to be issued in a few weeks. Signs of progress in Washington regarding the advancement of President Trump’s growth agenda would also be welcome news.
Heading into the afternoon, stocks are painting a mixed picture. – Robert Mitkowski
At the time of this writing, the author did not have positions in any of the companies mentioned.
Before the Bell
After a rousing market performance to start the penultimate week of the first half, the bulls toned it down noticeably yesterday, as the advance wilted, and attempts to revive things later on in the day ultimately failed. That in essence was the tale of the tape in the latest session, which saw the major equity averages post lower numbers from the start following undistinguished showings to begin the day across the sea. All of this took place amid sparse economic news, but a further rattling of the weakening oil markets on both sides of the Atlantic.
As noted, the problem yesterday was oil, as unchecked output in Nigeria and Libya sent crude prices down below $43 a barrel for a time, before a late recovery lifted the price back above that dollar amount. However, even with the somewhat less-onerous close, oil still tumbled into bear market territory, with a peak-to-trough slide of more than 20%. The drop in oil caused equities to linger in the red throughout, with prices finally closing at their worst levels of the day. As far as the major averages were concerned, the final losses were generally less than the gains of the preceding day.
Regarding oil, expectations now are that crude will test and possibly fall below $40 a barrel in the coming weeks, a psychological level that would dash hopes for a profit recovery of note in that troubled industrial grouping. In addition to oil, investors also were fixed on the latest news out of Washington where the Treasury Secretary affirmed that he was confident that a massive tax reform deal would be adopted this year. It has been hopes for such reform that have kept stock market optimism in place since the November election. Also potentially aiding the odds for tax reform, efforts to overhaul the health care law are again in the works.
Meantime, although there were no major economic items of note forthcoming today, there was no shortage of Federal Reserve Board members voicing their opinions on the state of monetary policy. To wit, the Boston Fed President Eric Rosengren said that the low interest-rate environment was likely to remain in place for some time, even as they handicap the central bank's ability offset negative shocks to the system. Short and long-term Treasury rates fell on this observation, as bond prices rose. Aside from these items, it was a quiet day for traders.
As to stocks, they were weaker throughout the session, with the selling picking up as the session wound down, so that the market closed just about at the day's nadir. In all, with that last-minute selling, the Dow Jones Industrial Average ended matters off by 62 points; the S&P 500 Index was lower by 16 points; and the NASDAQ, on weakness in technology, shed 51 points. Losses of just over 1% each were recorded by the S&P Mid-Cap 400 and the small-cap Russell 2000, while losing issues swamped gaining stocks on the Big Board, as most of the top 10 equity groups faltered.
Looking out at a new day, we see that stocks were lower in Asia overnight on the back of declines in our country, while on the Continent, equities were tracing a downward path in early dealings today, as well. Also, of note, after oil's descent yesterday, a barrel of crude is posting slight losses so far today, while Treasury yields are showing early slippage. And gold, after recent weakness, is indicating some strength in dealings this morning. As to our futures, the early read is weaker, on a day that will see date released on sales of existing homes. – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
