After The Close
Stocks opened lower this morning, but managed to recover some ground in the afternoon. At the end of the trading, the Dow Jones Industrial Average was down roughly 14 points; the broader S&P 500 Index was ahead five points; and the NASDAQ was higher by 22 points. Meanwhile, market breadth suggested a mixed performance, with decliners just ahead of advancers on the NYSE. From a sector perspective, the financial and technology stocks displayed some leadership, while the industrials and utilities weighed on the market.
In economic news, there was just one important item released today. Specifically, existing home sales dipped to an annualized rate of 5.38 million units in the month of June. Analysts had been looking for a somewhat better showing. Tomorrow will be a light day for economic news, too. However, on Wednesday, the monthly new home sales figures will be released.
In the corporate sector, a couple of widely watched companies delivered reports today. Specifically, Hasbro (HAS) shares moved up in price, after the toymaker delivered better-than-expected numbers. However, shares of Halliburton (HAL) retreated on concerns about the energy giant’s business outlook. The second-quarter earnings season is now in full swing, and numerous corporations will be weighing in with their numbers in the days ahead. Of note, tomorrow we will hear from 3M Company (MMM – Free 3M Stock Report).
Technically, stocks performed quite well during the first half of July. It remains to be seen if this strength can persist through the end of the month.
- 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
The most recent five-day stretch of trading on Wall Street saw the major U.S. equity averages bounce around the breakeven mark but never stray too far away from the neutral line. Continued worries about the escalating trade war between the United States and China were counterbalanced by what was mostly a strong batch of earnings reports from Corporate America, including Thursday’s night strong data from technology giant Microsoft (MSFT – Free Microsoft Stock Report). Meantime, the news on the U.S. economy continues to prove supportive for the equity market, though there are some concerns that the ongoing tariffs will eventually weigh on the performance of the domestic economy. That sentiment was noted in the latest Beige Book summation of economic conditions from the Federal Reserve (released last Wednesday afternoon).
On Friday, the major indexes turned in a similar performance to what we saw during the first four days of the busy week on Wall Street, most notably never straying too far from the neutral line. For the session, the Dow Jones Industrials, the NASDAQ, and the broader S&P 500 finished six, five, and three points, respectively, to the downside. In general, it was a slightly bearish session for Wall Street, with losing issues outnumbering winners by a modest margin on both the New York Stock Exchange and the NASDAQ. From a sector perspective, the biggest laggard was the consumer discretionary group. However, save for the consumer cyclical stocks, the performance of the 10 major equity groups mimicked the broader market, with none of the sectors straying too far from the neutral line.
Last week a good deal of the investment community’s attention was focused on corporate earnings, and we don’t expect that to change over the next five days, as second-quarter reporting season kicks into high gear. The earnings reports will be headlined by the releases from a number of Dow-30 components, culminating on Friday with reports from energy giants Exxon Mobil (XOM – Free Exxon Mobil Stock Report) and Chevron (CVX – Free Chevron Stock Report). Much like last week, we expect the earnings figures to be strong and provide a nice offset to the continued worries about deteriorating trade relations between the world’s largest economies.
The week ahead will also bring a number of important reports on the U.S. economy, including key data on housing and pricing. But investors will likely be most interested in the first estimate on second-quarter GDP, which is scheduled to be released before the commencement of trading on Friday morning. The consensus is that the U.S. economy expanded at a roughly 4% pace in the June quarter. That said, we still expect the news on the economy to take a backseat to the earnings data and the latest rumblings on the escalating international trade wars.
With less than an hour to go before the start of the new trading week stateside, stock futures are indicating a relatively flat opening for the U.S. equity market. Overseas, the main indexes in Asia finished in negative territory overnight, while the major European bourses are modestly in the red, as trading moves into the second half of the session on the Continent. Meantime, the new week has brought some M&A news, which is often viewed as a sign of a healthy equity market. Specifically, LifePoint Health Inc. (LPNT) has agreed to a $5.6 billion merger with RCCH HealthCare Partners, which is owned by funds managed by Apollo Global Management, while European concern Atos SE has agreed to buy Syntel Inc. (SYNT) in a $3.4 billion cash deal to help it get better access to U.S. financial customers, including American Express (AXP– Free American Express Stock Report) and State Street (STT). 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.
