After The Close
The stock market got off to a mixed start this morning, but managed to firm up somewhat in the afternoon. The tone was a bit subdued, as traders waited for more of the second-quarter earnings season to unfold. Of note, in the coming days many widely-followed corporations will weigh in with their numbers and provide updated guidance. At the close of the session today, the Dow Jones Industrial Average was ahead nearly 18 points; the S&P 500 Index was up eight points; and the NASDAQ was higher by 58 points.
Nonetheless, market breadth showed a divided session, with advancers and decliners about even on the NYSE. From a sector perspective, the technology stocks made notable progress, while the industrial issues and the utilities lagged the broader market. Softness in the utility names may have been due to concerns about power disruptions and extreme weather conditions.
Meanwhile, it was a quiet day for economic news. Looking ahead, the housing market will be in the spotlight for the next couple of days. Tomorrow, the existing home sales figures for the month of June will be released. On Wednesday, the new home sales numbers will follow.
Elsewhere, in the corporate sector, the second-quarter earnings season is just getting started. Today, shares of Halliburton (HAL) moved nicely higher. The company, which provides equipment and services to energy operators, delivered better-than-anticipated profits, and announced that it would be reducing some of its labor force.
Tomorrow, we will hear from Texas Instruments (TXN), as well as Visa (V – Free Visa Stock Report) after the closing bell.
Technically, stocks have pulled back a bit over the past week or so. Investors may be striking a cautious pose until the earnings outlook becomes clearer.
– 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
Fresh off of a stretch that saw the major U.S. equity hurdle some impressive milestones—the Dow Jones Industrial Average and the S&P 500 topped the 27,000 and 3,000 marks, respectively—to new record highs, investors took a bit of a breather last week. The major equity averages, even with second-quarter earnings season starting, never strayed too far away from the neutral line. Perhaps, investors are waiting for the outcome of next week’s FOMC meeting and the central bank’s interest-rate decision before making any more notable moves. The monetary policy talk late last week created some uncertainty. On Thursday, the major averages inched higher on comments from New York Fed President John Williams that a 50-basis-point cut may be possible, but reversed course on Friday after the New York Fed put out a statement clarifying Mr. Williams’ remarks. What the commentary from Fed leaders did on Friday was create some uncertainty, which is not typically greeted warmly by the investment community.
As noted above, the major averages, after a positive start to the session, boosted by a strong quarterly report from technology giant Microsoft (MSFT - Free Microsoft Stock Report), gave back those early gains and then some on the Fed news and some growing uncertainty about the ongoing U.S. trade dispute with China. The President once again said further tariffs on Chinese goods are still on the table, and investors took that comment as a sign that a trade agreement is still a ways away from happening. All told, the Dow 30, NASDAQ Composite, and the S&P 500 Index retreated 69, 61, and 19 points, respectively. Declining issues outnumbered advancers on both the New York Stock Exchange and the NASDAQ, and from a sector perspective, the move to the downside was led by the healthcare and utilities issues.
Last week kicked off the second-quarter earnings season, and for the most part the news was good, with many companies beating expectations. On the positive side, were reports from heavyweights Microsoft and JPMorgan Chase (JPM - Free JPMorgan Chase Stock Report). The intensity of earnings reports ratchets up further this week, highlighted by quarterly results from 10 Dow-30 components. In addition, to the Dow reports, we will get data from technology giants Amazon.com (AMZN) and Facebook (FB). Our sense is that barring some major news on the international trade front, the earnings reports will have a bigger effect on trading this week, given that the Federal Reserve entered a quiet period on Saturday ahead of next week’s monetary policy meeting.
Meantime, we will get some important data from the business beat this week, punctuated by Friday’s report on second-quarter GDP. It will be the first estimate of how the U.S. economy fared during the April to June period. Before we get the GDP data, we will receive reports on existing and new home sales and durable goods orders. The GDP data is sure to be scrutinized by the Federal Reserve ahead of next week’s monetary policy meeting.
With less than an hour to go before the commencement of the new trading week, the equity futures are indicating some modest buying when the U.S. stock market opens. So far overseas, the trading has been mixed. The main indexes in Asia finished lower overnight, while the major European bourses are in positive territory as trading moves into the second half of the session on the Continent. European investors are reacting positively to a steadying in Italy’s equity market. On Friday, Italy’s stock market posted its worst day in two months, as political tensions stirred speculation of a snap election that would likely increase uncertainty for investors, but also could potentially result in a more market-friendly government. This situation bears watching as it could potentially roil the world financial markets, given the recent economic struggles in the euro zone and the fragile state of some economies, including the aforementioned Italy, in that confederation. 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.
