After The Close
The equity market put in a mixed performance today, as traders turned their attention to developments overseas. Of note, the top leaders from the United States and China are set to hold discussions later this week, in an effort to improve trade relations between the two countries. Given that the situation has been quite tense for some time, Wall Street may be taking a cautious posture ahead of the talks. At the close of the day, the Dow Jones Industrial Average was ahead about eight points; while the broader S&P 500 Index was off five points; and the NASDAQ was lower by 26 points. Market breadth showed a divided session, with losers outpacing winners on the NYSE. The industrial stocks and consumer issues managed to hold up relatively well, partially offsetting weakness in the healthcare names.
Meanwhile, there were no major economic news items reported today, and that may have contributed to the market’s lackluster tone. Tomorrow, the pace should pick up somewhat. Specifically, we will get a look at the new home sales figures for the month of May, and the latest monthly consumer confidence numbers.
In the corporate sector, there have been some notable developments. Specifically, shares of Bristol-Myers Squibb (BMY) headed lower today, after the pharmaceutical giant announced that it would be willing to sell a key drug in order to gain approval for the pending acquisition of Celgene (CELG). Elsewhere, shares of Caesars Entertainment (CZR) moved nicely higher on news that the casino operator has agreed to be purchased by Eldorado Resorts (ERI).
Technically, the stock market staged a solid advance during the first weeks of June. Looking ahead, the upcoming trade talks will likely be the key area of concentration. A positive outcome might serve as the catalyst needed to push equities higher from these levels.
– 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
Wall Street apparently needed a breather following yet one more stellar trading session, and proceeded to get one at the opening on Friday. Thus, one day after the S&P 500 Index soared to an all-time high and the Dow Jones Industrial Average moved closer to a record on optimism about interest rates, the market began the latest session by marking time. All told, after the first few minutes of trading, the Dow, the S&P 500, and the NASDAQ all were slightly lower, but with no real conviction to head south. It seems that the Street is celebrating the accommodative stance by the Fed but concerned about the latest strife with Iran.
Other early themes on Friday were modest weakness in the tech sector and the aforementioned optimism that the nation's central bank was seemingly prepared to reduce interest rates this year should the economic backdrop recommend such a course. At its FOMC meeting last week, the Fed indicated that while it had no plans to reduce interest rates this year, and could still wait to do so in 2020, it also acknowledged that it stood ready to reduce borrowing costs soon if the economy demands such a monetary shift. That was all the bulls needed to hear and stocks pressed higher on Thursday, in response.
But Friday started out in a different vein, with the conflict involving Iran and lingering trade issues with China taking some of the starch out of the rally initially. But that caution would not last long, and soon the bulls would lead another charge, albeit a much more modest one that would see the Dow rise by just over 150 points at its session best late in the morning. However, the S&P 500 Index, following that late-morning spurt, would waver, edging into and out of the red, while the NASDAQ would stay mostly below the breakeven line. The smaller indexes, though, would falter almost throughout the day.
It seems as though the stock market is hesitating a little as the S&P 500 holds at record levels and the Dow moves somewhat closer to a peak. On the plus side, there's the prospect of an interest rate cut, now seemingly possible as early as next month. Conversely, the economy looks a bit tired, with data out on Friday showing just a scant month-to-month increase in sales of existing homes, and a decline when measured on a year-to-year basis. Then, there is the earnings outlook, which suggests that second-quarter profits are now expected to be down slightly from a year earlier. Finally, the world is clearly in a dangerous place, with strife between the United States and Iran on the investment community's minds.
Meanwhile, after spending most of the day in the black, the Dow, affected by option expirations, eased slightly into the red as the session ended, finally concluding matters off 34 points. The S&P 500 Index eased four points and the NASDAQ shed 20 points. Stalwart performers recently gave some ground, but held near all-time highs. Also falling was the bond market, as yields on Treasury notes, off much of the week, rebounded nicely with the 10-year vehicle closing comfortably above 2%. All told, the gains of the week were still nicely intact, even with this late slippage.
Looking out at a new day and beginning the final week of June and the first half, we see that shares in Asia were generally mixed in the overnight hours; in Europe, meantime, the leading bourses are thus far lower amid growing tensions between the United States and Iran. Also, oil prices, up late last week on increased tensions in the Middle East, are now gaining anew and Treasury note yields, which spiked higher on Friday, are easing back some early this morning. In other news, this is a busy week for economic data, with reports on consumer confidence, orders for durable goods, pending home sales, and personal income and spending. Ahead of all this, the U.S. equity futures are posting early gains in a week that will see a strong first half for equities conclude.
– Harvey S. Katz, CFA
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
