Before The Bell
Following four straight days of gains for the stock market, Wall Street sought to put on a so-called drive for five. However, investors were stymied at the outset, as concerns about economic data issued earlier in the day, most notably first-time jobless claims, which came in higher than expected, sent stocks lower to start the session. The stock market would bounce off those lows by the end of the first half hour of trading, though. Leading the way lower was the NASDAQ, losing about 140 points in the first 30 minutes or so of the day.
As to the economic reports, one day after the Commerce Department reported some decent numbers for June on industrial production and capacity utilization at the nation's factories, the government released figures showing that retail sales had bumped up by a somewhat greater-than-forecast 7.5% last month following an outsized rise of 18.2% in May. Contributing to this strong advance in June were sales at furniture, appliance, and electronics stores. Sales at clothing outlets also surged, but as in-person shopping increased, on-line business eased.
At the same time, the Labor Department noted that first-time unemployment filings had come in at 1.30 million for the latest week, which was virtually unchanged from the prior seven days, and was above the 1.25 million rise expected. Importantly, seasonal adjustments held the tally to 1.3 million. Excluding such adjustments, the figure would have been 1.5 million. The stubbornly high level of claims reflects a number of states backtracking or going into a pause on reopening endeavors amid the recent severe outbreaks of COVID-19.
Back to the market, Wall Street also was hurt by mixed economic data out of China, and weighed down by some less-than-stellar earnings reports from some corporate heavyweights, such as Bank of America (BAC). The averages then sought to recover further as we moved past the first hour, but remained lower, in particular the NASDAQ, which again was pressured by losses in big tech, including Microsoft (MSFT). The losses in place through much of the day would then continue.
In fact, the deficits would increase as the afternoon wore on, with the Dow Jones Industrial Average reaching a session-worst decline of nearly 300 points as we reached the final hour of trading. However, there would be no late meltdown, with the averages actually firming a little down the homestretch. By the end of trading, the Dow was still off by 135 points while the NASDAQ, under selling in the tech space, declined by 77 points. Then, after the close, streaming giant Netflix (NFLX) posted quarterly earnings that missed the mark, and selling ensued.
Meanwhile, the futures were relatively flat in after-hours activity after the first down day in five, and the market seems poised at this hour to head forward in a similarly uncertain fashion when trading resumes somewhat later this morning.
– Harvey S. Katz, CFA
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
