Before The Bell
The stock market started strongly yesterday, as a few good economic data releases helped improve sentiment. The Case-Shiller index showed that U.S. housing prices increased 14% year over year, boosting stock prices in the construction and homeownership sectors. After an initial price move higher, sentiment quickly turned, and traders spent most of the day reducing risk, sending the indices lower in a moderate fashion. This move downward caused the indices to end the day just above their prior closes, though readers should note that the S&P 500 and NASDAQ finished at record highs. All told, the Dow Jones Industrial Average was up 9 points, the S&P 500 finished higher by 1 point, and the NASDAQ rose 28 points.
Though the major averages ended at or near all-time highs, market breadth was slightly negative, as decliners outpaced advancers by a 1.2-to-1.0 ratio. Technology issues were among the best performers, aided by strength in a few semiconductor names. On the other hand, utility stocks were among the weakest in the session. Oil prices increased during the day, as traders think demand continues to outpace supply. Meantime, U.S. Treasury bond yields were mixed, with near-term interest rates rising and long-term ones falling.
The futures market started positively last night, as sentiment rose after the official close of the session. It continued throughout the evening hours and was decidedly in the green by midnight. By the morning, the futures had taken a turn lower and were slightly in the red, suggesting a weak start to the trading day.
Looking ahead, a slew of economic data results will be released today, including the Automatic Data Processing (ADP) employment report and pending home sales. Additionally, a few regional Fed chairs will be speaking, giving further insight into how the central bank is thinking. Later in the week, jobless claims, the ISM Manufacturing Index, and the employment and unemployment figures for June will also provide clues to how the economy is doing.
Today is the busiest day of the week for earnings reports, as a few companies will release quarterly data ahead of the three-day holiday weekend. These include a wide swath of industries, including retailers, semiconductors, and food companies. Additionally, Dow-30 component Walgreens Boots (WBA) and spice maker McCormick & Company (MKC) are on the docket tomorrow. Overall, we think that traders will be looking at economic reports and commentary from the regional Fed Presidents to determine market direction.
– John E. Seibert III
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
