After The Close
The stock market got off to an impressive start this morning, but pared these early gains, as the session progressed. The initial advance was fueled by optimism that a trade deal between the U.S. and China might be reached at the G20 summit, slated to take place in the coming days. Specifically, Treasury Secretary Steven Mnuchin made some remarks indicating that progress is being made. At end of the day, however, the averages were mixed. The Dow Jones Industrial Average was down 11 points; the S&P 500 Index was off four points; while the NASDAQ was higher by 25 points. Meanwhile, market breadth showed an uneven session, as advancing issues outnumbered decliners by a thin margin on the NYSE. The technology stocks and basic materials issues moved nicely higher today, while healthcare stocks and utilities retreated.
Meanwhile, traders received a small batch of economic reports this morning. It is worth mentioning that durable goods orders declined 1.3% in the month of May, where a slight increase had been anticipated. However, the core figure, which excludes transportation, managed to show an advance. Tomorrow will be a full day for reports. We will get a look at the latest weekly initial jobless claims, the final estimate for first-quarter GDP, and the pending home sales numbers for the month of May.
In the corporate sector, we heard from a few widely-followed names over the past 24 hours. Specifically, shares of FedEX (FDX) moved up, even though the transportation giant offered a soft outlook, due to global weakness. Things went well too for Micron Technology (MU). That stock advanced nicely in response to a solid report. The news likely helped drive many other semiconductor issues higher.
Technically, the stock market put in a good showing in June. From here, all eyes will be on the G-20 summit soon to take place in Japan.
– 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
After back-to-back sessions of minor profit taking, the stock market eased back for a third straight day yesterday morning, with the leading averages all heading modestly lower as the first hour concluded. This unimposing movement occurred as investors awaited commentary from Federal Reserve Chair Jerome Powell. Earlier this month, readers will recall that the central bank opted to leave interest rates unchanged, but suggested that it could begin reducing borrowing costs as soon as next month should the economy weaken more or inflation fall further below the Fed's 2% target.
Powell, meantime, spoke at the Council on Foreign relations during the middle of the trading day yesterday and continued with a mixed message. The guessing remains that the Fed will reduce interest rates in July, when its Federal Open Market Committee meets next and he did nothing to dispute that view. Also on investors' minds is the crisis with Iran. Escalating tensions between our country and that nation again have been in the headlines. Further, the Street is worried about this week's G-20 meeting between the United States and China to see whether these two economic powerhouses can reach an accommodation on trade. As to such a détente, optimism seems to be growing with our Treasury Secretary this morning suggesting that a deal is likely to get done.
Meanwhile, as the morning moved along, we had the economy to deal with, and yet two more pieces of dour news, this time in the form of a disappointing reading on consumer confidence and a decline in new home sales. On point, the Conference Board reported that its survey on consumer confidence showed a steep decline in June, with that composite falling from 131.3 in May to 121.5 in the current month. That drop off followed three consecutive months of increases and reflected a less favorable assessment of business and labor market conditions.
In addition, we received news on sales of new home during May. Here, too, the news was disappointing, with total sales coming in at 626,000 residences on an annualized basis last month, down from 679,000 in April. The 626,000 homes sold annually, meantime, was the lowest such total since last December. Overall, the housing sector is mixed, with housing starts fairly flat, sales of existing homes edging higher, and the new home sales data showing some weakness. All of this is consistent with the slowing pace of GDP growth in the aggregate in the now-ending quarter.
As for the stock market, it remained lower into the noon hour in New York, in spite of the news of a big corporate merger, as drug maker AbbVie Inc. (ABBV) has agreed to purchase the stock of Botox-maker Allergan PLC (AGN) for $63 billion in cash and stock. Shares of AbbVie fell on the news, while those of Allergan rose in activity trading. Overall, the market moved still lower as the afternoon progressed, with the Dow for a time falling by some 165 points. Iran, the economy, and trade remain on the front burner for investors with the Fed Chair's indicated independence from political pressures not helping the bullish cause.
Things weakened further down the home stretch, with the Dow falling back as many as 200 points and the NASDAQ, on weakness in shares of Microsoft (MSFT) falling by 125 points (a far larger percentage) at its nadir. In all, the blue chips closed off 180 points and the NASDAQ gave way by 121 points, with many more losing stocks than gaining issues on the session. Looking ahead and after a disappointing showing yesterday, the markets in Asia were lower overnight, while the leading bourses in Europe are showing early gains this morning, as our futures are indicating a strongly higher open on our shores on optimism over a trade pact with China.
– Harvey S. Katz, CFA
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
