After the Close
Stocks turned in another record-setting performance today on the heels of solid economic news and generally favorable earnings reports. The broad S&P 500 index, up seven points, reached an all-time high, as did the tech-oriented NASDAQ, before that index closed about unchanged. Small-cap issues also gained, with the Russell 2000 hitting fresh highs. Meanwhile, the Dow Jones Industrial Average rose 100 points, although it came up a bit short of its high-water mark. Market breadth mostly confirmed the bullishness, with advancing issues topping decliners by more than a three-to-two margin on the New York Stock Exchange, but a less impressive four to three on the NASDAQ.
The tone was set by a broad section of large-capitalization companies reporting upbeat second-quarter profits, with most offering views of the future that allowed Wall Street to retain a positive bias.
Still, it was curious that the NASDAQ, which has provided a great deal of stock-market leadership lately, did little. That was partly because of weakness in Alphabet (GOOG) shares. The parent company of search giant Google noted that expenses to build traffic on mobile devices were rising, causing some concern about margins.
Meanwhile, the investing backdrop was aided by strong economic data that showed consumer confidence near a 16-year high and a nice percentage gain in June housing prices.
However, it is doubtful that recent data will affect the Federal Reserve’s near-term position on interest rates. The Fed began a two-day policy meeting today, and is overwhelmingly expected to leave rates unchanged, having raised rates just last month. There could be one more rate hike before the year is over, though. Certainly, the factors lifting consumer confidence, good jobs growth and a strong housing market, will play into central bank policy over time.
In terms of stock market sectors, energy shares regained some luster following a more than a $1-a-barrel rise in oil prices. An assertion emanating from Saudi Arabia that the Kingdom may limit oil exports by one million barrels a day provided a spark. That helped sentiment, at least temporarily, in a market that has been marked by bearishness in recent weeks.
Financial names, including the big banks, also exhibited relative strength, as did the consumer cyclical sector. On the downside, the tech, healthcare, and utilities sectors lagged.
Tomorrow will bring around round of earnings releases that have the potential to broadly lift stocks if the news, on balance, is good. – Robert Mitkowski
At the time of this writing, the author did not have positions in any of the companies mentioned.
Mid-Day Update - 12:10 PM EDT
The equity markets got off to a largely higher start this morning, and are now putting in a generally constructive session. At just past noon in New York, the Dow Jones Industrial Average is ahead 126 points; the S&P 500 Index is up 11 points; and the NASDAQ, which had been weak earlier, is now around breakeven. Market breadth is supportive, with winners leading losers by a comfortable margin on the NYSE. Leadership can be found in the energy and basic materials issues. Of note, the price of crude oil, which is now at just over $47 a barrel, is moving higher today. This may be helping shares of companies that operate in the commodity markets. In contrast, softness can be seen in the healthcare and most technology names.
Meanwhile, traders received a few economic news items this morning. Specifically, the S&P Case-Shiller Home Price Index showed an advance of 5.7% during the month of May. This reading was in line with expectations and confirms that the nation’s housing market, which plays an integral role in the broader economy, remains in good shape. Elsewhere, the Conference Board’s Consumer Confidence Index rose to 121.1 during the month of July, coming in better than had been anticipated. Tomorrow, we will get a look at new home sales for the month of June. In addition, in the afternoon the FOMC will conclude its two-day meeting with an interest-rate decision and some prepared remarks.
Elsewhere, the second-quarter earnings season is now in progress. Over the past 24 hours, we heard from a few large names. Specifically, in the technology area, shares of Alphabet (GOOG) are slipping, on concerns about the company’s business outlook. The weakness here likely explains the sluggishness that we are seeing on the NASDAQ. In the Dow Industrials, shares of 3M (MMM – Free 3M Stock Report) are off after that company delivered somewhat lackluster results. However, Caterpillar (CAT – Free Caterpillar Stock Report) stock is trading higher after the equipment maker’s numbers showed solid progress.
Technically, the stock market continues to hold up well. Going forward, much will depend on the way the rest of second-quarter earnings season progresses. – 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
Unlike so many Mondays this year, the latest start to a new trading week on Wall Street did not begin with another bullish roar. Rather, it commenced with something closer to a bullish yawn. The market did not unravel, to be sure, nor was there a major early reversal. In fact, stocks did comparatively little given how extended the market is these days. Still, there was some tilt to the downside in early dealings, with the loss in the Dow Jones Industrial Average swelling to about 80 points in late morning, before some buying surfaced near noon to pare the deficit somewhat.
Still, we entered the afternoon with that blue chip composite off by about 50 points. However, on upbeat sentiment on the technology group ahead of a succession of major profit issuances in the days to come, the NASDAQ was ahead by some 10 points. The Dow pared its losses a little further in the next hour on the optimistic sentiment with regard to earnings. The optimism, meantime, seems warranted as almost 75% of the companies in the S&P 500, which have released earnings in the latest quarter have topped expectations.
Also of note, the National Association of Realtors released data on sales of existing homes yesterday morning, and while sales dipped a little from the month before, the June tally at 5.92 million homes sold was still better that had been forecast. Further, the Street was a little concerned, as per usual, about the Federal Reserve meeting that will begin shortly, although that two-day get together is unlikely to result in a change in interest rates. Still, until the announcement is make by the Fed tomorrow afternoon, there will be some logical nervousness.
Meanwhile, stocks continued to waver somewhat as the afternoon proceeded. The equity market, which remains overbought, has been finding it somewhat difficult to carve out a path to still higher prices recently. We would expect this range-bound trading to persist for a while assuming that there are no unwanted surprises entering the picture, from any number of sources. The market continued on this uneven path, with the Dow lower and the NASDAQ up nicely into the late afternoon.
Then, as the session wound down, there was a modicum of buying for a brief spell near the close, which reduced the Dow's one-time 80-point plus loss to less than 30 points. But that late buying could not endure, and after some last-minute unloading of the blue chips, the Dow concluded with a deficit of 67 points. The S&P 500 lost three points, but the NASDAQ, strong all session ended matters with a gain of 23 points. The small-cap Russell 2000, in the meantime, nudged up two points, to end a mixed session just shy of a new high.
Looking out at a new day and ahead of a flood of earnings reports, with almost a third of the S&P 500 companies due to post results this week, and in front of the Fed's FOMC meeting, we see that stocks were mixed in Asia overnight. In Europe, meanwhile, the major bourses are trading higher at this hour. Also of note, oil, a 1.3% gainer yesterday is showing further gains on pledges of Saudi output curbs in early New York dealings so far this morning, while metals prices are off a tad, and Treasury yields are up. As to our futures, the early read is higher. – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
