After The Close
The stock market put in a mixed showing today, as traders sifted through the latest bundle of corporate profit reports. Specifically, the Dow Jones Industrial Average was ahead 113 points; the broader S&P 500 Index was up off nine points; and the NASDAQ ended down 80 points. Market breadth showed a fragmented session, as well, as advancers were moderately ahead of decliners on the NYSE. From a sector vantage point, the industrial issues and utility stocks forged ahead, while the technology names faltered.
In economic news, there were a few notable reports issued today. For one, durable goods orders increased 1.0% in the month of June, where analysts had been looking for a better showing. Furthermore, initial jobless claims rose to 217,000 during the week of July 21st, which was in line with expectations. Tomorrow we will get a look at the advanced estimate for second-quarter GDP.
In the corporate arena, the second-quarter earnings season is in full swing. Over the past 24 hours we heard from many widely followed companies. Of note, shares of Facebook (FB) tumbled after the social media giant tempered its outlook, owing to security issues. The decline in this stock accounted for much of the weakness on the NASDAQ today.
Technically, stocks have been holding up well lately, helped by a relatively strong economy and corporate sector.
- 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
Also unsettling Wall Street was the fact that General Motors (GM) cut its expectations for the 12 months. The company pointed to sizable increases in commodity costs for its downward revision. GM shares fell nearly 7% early in the day. However, most other reporting companies did better than forecast and did not guide lower. Nevertheless, these two cases, which involved high-profile enterprises, were enough, when coupled with lingering worries about tariffs and trade, to send the equity market lower early on, with the Dow dropping almost 100 points in the first hour of trading. The NASDAQ, though, remained modestly in the black.
In other news, the U.S. Department of Housing and Urban Development reported that sales of new single-family houses were at a seasonally adjusted annual rate of 631,000 in June. That was 5.3% below the revised May tally of 666,000 properties. But that was still 2.4% above the June, 2017 estimate. (Originally, the May, 2018 estimate had been 689,000; expectations for this past June had been for sales of 670,000 homes, so there was a notable shortfall.) This tally, along with a slight dip in sales of existing homes last month and a drop in housing starts points to some possible softness developing in the housing sector.
But Wall Street seemed to take this all in stride and, in fact, the Dow started to come back as the morning moved along, with that index's loss starting to shrink. The small-cap composites, though, weakened as the day progressed. Unfortunately for the bulls, the respite for the Dow was brief, and as we moved late into the morning, the selling picked up, with that index falling to a 120-point mark. Losses also were seen in the S&P 400, S&P 500, and the Russell 2000. Breaking things down, half of the 10 leading equity groups were lower, while gaining and losing issues were even on the NYSE and the NASDAQ. It was a mixed day to that point.
Meantime, a second recovery attempt would take hold as we neared the noon hour, with the Dow shrinking its deficit once again, while the NASDAQ, on tech strength, pushed higher. This time, however, the comeback was more sustainable, and as we moved into the home stretch, the Dow had recouped all of its loses and moved slightly into the black. The S&P 500 and the NASDAQ (up better than 50 points), were strongly positive. The smaller caps still lagged, though, but much less so than earlier in the session. In other areas, most of the key sectors were higher late in the day, while gaining stocks were pulling ahead of losing issues.
This choppy pattern continued into the final minutes when a strong end-of-session rally ensued, which carried the major indexes to their highs for the day. The apparent reason for the late surge was a report that the President had secured concessions from the European Union that presumably would avoid a trade war. Interestingly, and showing the power of trade issues, it was the Dow and the S&P 500 that headed strongly higher, with the other indexes improving only incrementally. At the close, the Dow, with that late charge, ended up by 172 points. The S&P 500 rose 26 points and the NASDAQ ended with a 91-point advance.
Looking out on a new day now, we find that stocks were lower in Asia overnight; in Europe, where the international trade situation appears to have improved, the leading bourses are trading in a mixed pattern. Also, oil prices are mixed; Treasury note yields are up ahead of the European Central Bank meeting; and U.S. equity futures are now trading with steep losses on the NASDAQ following a disappointing earnings report from Facebook (FB). In all, stocks seem headed for a rough start at this time.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
