After The Close
The stock market put in a mixed showing today, as traders awaited a busy week. Of note, on Wednesday, the FOMC will conclude its two-day meeting with an interest-rate decision and issue some prepared remarks. Many are anticipating a small reduction in rates, as the central bank looks to keep the U.S. economy on track amidst global pressures. Further, investors are hoping that the United States and China can make progress settling their trade dispute during the talks set to resume this week. Finally, the second-quarter earnings season continues to unfold, and Wall Street will be carefully following the numerous corporate reports.
At the end of today’s session, the Dow Jones Industrial Average was ahead 29 points; while the broader S&P 500 Index was down five points; and the NASDAQ was lower by 37 points.
Market breadth was somewhat negative, with decliners outpacing advancers on the NYSE. From a sector perspective, the consumer and healthcare stocks moved higher, offsetting weakness in the financial and technology issues.
There were no major economic reports released today. However, tomorrow we will be a busier day. Specifically, personal income and spending numbers for the month of June are due out. We will also get a look at the latest monthly consumer confidence report, as well as the pending home sales figures. Looking to the end of the week, on Friday morning the government will release its July employment report. That issuance certainty has the ability to move the market, one way or the other.
Elsewhere, in the corporate sector, shares of Cooper Tire & Rubber (CTB) moved lower today. The company posted weak results and issued a soft outlook, citing a slowdown in international business. In M&A news, shares of Mylan (MYL) surged on reports that the drug company has made a deal to acquire some assets from Pfizer (PFE – Free Pfizer Stock Report).
Technically, stocks have staged a nice advance over the past several weeks. It remains to be seen if the bulls can keep their buying campaign in place, or if some consolidation will be in order.
– 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 took investors on a rollercoaster ride, with the highs and lows driven by a plethora of earnings news that included reports from 10 Dow-30 companies and some technology heavy weights. The reports were mixed, which was why trading bounced back and forth around the neutral line, with a few of the gains and pullbacks somewhat notable. The market also got a boost earlier in the week from news that the United States had sent a convoy of economic leaders to China to continue trade talks. The news from the Federal Reserve was light, as the central back was in a quiet period ahead of this week’s much-anticipated FOMC meeting.
On Friday, the major equity averages spent a good portion of the session in positive territory. The technology heavy NASDAQ Composite advanced notably, briefly hitting a record high, with the main catalyst being very strong quarterly results from industry behemoth Alphabet (GOOG). The parent company of Google finished the day more than 10% to the upside and was the force behind the move higher for the broader stock market. For the day, the Dow Jones Industrials, the NASDAQ, and the broader S&P 500 Index finished 51, 92, and 22 points higher, respectively. In general, the buying was broad-based, with advancing issues outnumbering decliners by more than a two-to-one ratio on both the Big Board and the NASDAQ. From a sector perspective, nearly all of the 10 major equity groups, with the exception of the energy issues, finished in positive territory, with notable strength in the technology and higher-yielding areas. The likelihood that the Federal Reserve will cut interest rates this week, is making the higher-yielding equities more attractive to income-oriented investors than their fixed-income counterparts.
The sentiment that the central bank will loosen the monetary reins at its two-day monetary policy meeting that commences tomorrow strengthened further after the release of second-quarter GDP data on Friday. That report from the Commerce Department showed that output slowed to an annualized rate of 2.1% in the April-to-June period. The investment community’s sense is that with inflation benign and the international trade concerns, the lead bank will cut rates in an effort to spur more spending and investing stateside. We will get the outcome of the Fed’s meeting on Wednesday afternoon at 2:00 P.M. EDT. The Federal Open Market Committee doesn’t meet in August, but the bank will hold its annual get together in Jackson Hole, Wyoming late next month.
In addition to the aforementioned Federal Reserve’s monetary policy decision this week, we will get another heavy dose of earnings news from Corporate America, including reports from seven Dow-30 companies, including data from technology giant Apple (AAPL – Free Apple Stock Report) and major drug companiesMerck (MRK – Free Merck Stock Report) and Pfizer (PFE – Free Pfizer Stock Report). The later drug maker is in the news this morning, as reports surfaced that Pfizer plans to separate its off-patent drugs business and merge it with Mylan (MYL), which would bring blockbuster treatments Viagra, EpiPen and Lipitor under the same umbrella. The new company, to be based in the United States, would be led by Pfizer's unit President Michael Goettler, who will become the chief executive officer. As far as Apple goes, the investment community will be looking to see what effect the ongoing trade dispute with China, where the company does a great deal of business, has had on the technology behemoth. So far, the earnings news has seen most companies beat expectations, but that percentage may come down some over the next fortnight when the reports from the smaller companies and the retailers ratchet up.
With less than an hour to go before the commencement of the new trading week stateside, the equity futures are pointing to a slightly higher opening for the U.S. equity market. So far over seas the trading has generally been mixed. Overnight, the main indexes in Asia finished lower, while the major European bourses are in the black, as trading moves into the second half of the session on the Continent. Our sense is that barring a breakthrough on the trade talks between the United States and China, trading on the homeland will be quite contained ahead of Wednesday’s monetary policy decision. That narrative seems to be unfolding overseas where trading has been quite subdued so far today. 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.
