After The Close
The U.S. stock market got off to weak start this morning, and continued to retreat for much of the afternoon. At the end of trading, the Dow Jones Industrial Average was down 196 points; the broader S&P 500 Index was off 18 points; and the NASDAQ was lower by 69 points. Market breadth showed widespread selling, as decliners were well ahead of advancers on the NYSE. Most of the major equity groups lost ground, with notable weakness in the energy and industrial names. In contrast, the defensive utilities managed to buck the downtrend to some extent.
Traders received a number of economic news items this morning. Specifically, initial jobless claims came in at 218,000 for the week of June 16th, which was a better-than-anticipated reading. Elsewhere, according to the Philadelphia Fed, conditions in the greater Philadelphia area weakened in the month of June. Finally, the Conference Board’s Leading Indicators report also came in with a lackluster May figure.
In corporate world, a few companies weighed in with their numbers over the past 24 hours. Specifically, shares of the Kroger Co. (KR) moved up, after the retailer delivered better-than-expected results and offered an upbeat outlook. Shares of Darden Restaurants (DRI) also advanced, after that company posted encouraging results.
Technically, the stock market has pulled back over the past week, or so. It remains to be seen if traders are taking a slight pause, or a deeper pullback may be unfolding.
— 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
The major U.S. equity indexes steadied on Wednesday after a tough start to the week on global trade war fears, particularly continued fighting between the world’s two largest economies. The Dow Jones Industrial Average, which has been under the most pressure recently, given that it is comprised of multinational companies that would be hurt by trade wars, was lower again on the middle day of the trading week, but the lost was rather contained. Too, the other indexes finished to the upside, with some momentarily easing rhetoric between the U.S. and China on tariffs and comments from Federal Reserve Chairman Jerome Powell providing some support for equities.
For the session, the Dow 30 was down 45 points, while the NASDAQ and S&P 500 Index rallied 55 and six points, respectively. In general, it was an upswing on Wall Street, with advancing issues leading decliners by almost two to one on both the New York Stock Exchange and the NASDAQ, and nearly all of the 10 major equity groups finishing in positive territory. Only the basic materials and telecommunications stock finished nominally to the downside. The leadership on Wednesday came from the healthcare and technology stocks.
The day’s biggest news came from the Federal Reserve. The market reacted positively to slightly dovish commentary from Chairman Jerome Powell, who said that the U.S. central bank should continue with a gradual pace of interest-rate increases. Last week’s Fed statement following its latest FOMC meeting was seen as more hawkish, but Mr. Powell’s comments were more assuring for traders, who typically don’t like when the Federal Reserve is aggressively tightening the monetary reins. The Fed leader went on to say that the U.S. labor market does not seem to be overly tight, which would give the central bank more wiggle room with regard to the pace of interest-rate hikes.
The relatively soothing comments from Fed Chair Powell, along with thoughts again that the recent threat of tariffs by the Trump Administration is a tactic to get China to the bargaining table on trade talks—and many of the tariffs will not materialize when push comes to shove—helped ease some of the investment community’s fears. In addition, there also are some on Wall Street that believe in the end, China will come to the negotiating table with concessions first. Too, there was some other market support news from China yesterday. Specifically, reports surfaced that China will use targeted cuts in banks' reserve requirement ratios and other monetary policy tools to boost credit for small firms. That said …
The new day has brought a pickup in trade and geopolitical worries—and the resultant increased rise in the value of the U.S. dollar, which hit an 11-month high earlier this morning. The stronger greenback raises inflationary concerns outside of the U.S., as it puts pressure on any nation that is holding dollar-denominated debt. This has raised the anxiety somewhat in the global markets.
With less than an hour to before the commencement of trading stateside, stock futures are indicating a slightly lower opening for the U.S. equity market. Meantime, all of the major European bourses are trading in the red and the main indexes in China were lower overnight. Likewise, investors should keep an eye on the oil market, as crude quotations are again lower ahead of next week’s OPEC confab. 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.
