After The Close
The major U.S. equity indexes started the last session of a volatile trading week firmly in positive territory, and stocks ended the day up sharply.
In economic news, the Commerce Department reported that housing starts were down 4%, to an annual rate of 1.19 million. However, building permits (a more forward-looking indicator) increased 8.4%, to a yearly rate of 1.34 million. The markets, though, largely looked past these numbers, and continued to bob and weave along with developments on the U.S.-China trade situation. On that front, President Donald Trump recently suggested that the impasse would be short-lived, and the two nations remain on schedule to resume talks in September. On the other hand, China appears ready to respond to the additional tariffs on its goods that go into effect on the first of September. Along with the stock market rally, Treasury yields are recovering from their record lows, after an inverted yield curve (with long-term rates dipping below short-term rates) spooked the markets on Wednesday.
At the closing bell, the 30-stock Dow Jones Industrial Average was up 306 points (1.2%) while the broader S&P 500 was ahead by 41 points (1.5%). The tech-laden NASDAQ fared the best of the lot, gaining 129 points on the session, or 1.7%. All of the 10 major market sectors ended the day in positive territory, led by technology and industrials, both of which were up by 1.9%. Defensive stocks were the laggards today, with utilities up by just over half a percent. Altogether, advancing issues outpaced declining stocks by better than three-to-one.
Elsewhere, light sweet crude prices advanced 0.7%, to $54.85 a barrel, ending the week with a 1.1% gain. However, the commodity is still down 16% year over year. Lastly, trading was also upbeat on the European bourses today. Germany’s DAX led the charge with a gain of 1.3% while France’s CAC-40 tacked on 1.2%, and the UK’s FTSE 100 was ahead by nearly three quarters of a percentage point.
– Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before The Bell
The whirlwind continues on Wall Street. Thus, after a sharp setback on Monday, a dramatic comeback on Tuesday, a mammoth stock market selloff on Wednesday, in which the Dow Jones Industrial Average shed 800 points, equities attempted a recovery in trading yesterday. In part, this latest attempt at a rebound was helped by a strong quarterly report from giant retailer Walmart (WMT – Free Walmart Stock Report). That stock rose in early action. But the bigger story, we sense, were comments by China yesterday morning that it hopes the United States would meet it half way with regard to trade issues.
The advance, which was never really strong during the morning, would encounter some brief backsliding as we reached the first hour of trading, with the Dow and the tech-heavy NASDAQ both easing back into the red for a time. Uncertainty about trade and the continuing move lower by Treasury note yields were major factors. In all, the yield on the 10-year Treasury note fell to 1.56% in the morning, another multi-year low, as recession fears continued. Economic concerns globally, highlighted by disturbing data out of China, the world's second largest economy, and Germany, the Continent's biggest factor also were problematic.
Meanwhile, the equity market continued on its unsettling seesaw as the morning wound down, with alternating plus and minus signs in the key averages, but with a modest bias to the upside being the case for much of this span, as Wall Street sought to rebound from the worst selloff of the year to date on Wednesday. Meantime, in addition to the strong showing by Walmart, stocks also were affected by a weaker release from fellow Dow component Cisco Systems (CSCO - Free Cisco Stock Report), with that issue faltering in response. One other setback of note was in General Electric (GE) stock, on allegations of accounting missteps, which GE denies.
The market then would move somewhat higher during the first part of the afternoon, as the Dow's advance climbed past 100 points for a time before settling back somewhat. This moderately profitable trend would break suddenly in the early afternoon, as the Dow and the other averages would turn markedly negative for a brief and troubling span. As noted, though, that reversal would be brief and after the blue chip composite had fallen by about 135 points, the buyers rushed in again and in a matter of minutes the indexes were all back in positive territory, if modestly.
The market would trend unevenly through the rest of the session before closing with the Dow up 100 points and the S&P 500 rising a bit, but with small losses in the NASDAQ and the small-cap Russell 2000. Interestingly the day also featured a pair of headline economic reports, with data showing as larger-than-expected 0.7% jump in July retail sales, but a 0.2% dip in industrial production. Taken together, these reports did little to alter thinking on Wall Street. More important barometers were a drop in the yield on the 10-year Treasury note (to 1.52%) and a descent in the yield on the 30-year Treasury to a record low 1.98%.
Looking out at the week's final session and ahead of options expiration on Wall Street, we see that the major indexes were modestly higher in Asia overnight. In Europe, the major bourses are thus far trading with gains, as well. Also, oil prices are edging upward; gold is falling; and yields on the 10-year Treasury note, which, as noted, ended at 1.52% yesterday, now are at 1.56%. All of this suggests that we are looking at a nicely higher opening on Wall Street this morning.
– Harvey S. Katz, CFA
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
