After The Close
After opening the day lower, a majority of U.S. stocks spent Friday afternoon in positive territory, though the indexes wound up in the red. Still, following the politically driven decline in valuations since Wednesday afternoon, each of the major large-cap indexes remains well below its respective previous-week closing levels. While the bulls got a boost from a rosy Consumer Confidence Survey reading (97.6) from the University of Michigan, today’s directionless movement underscored the recent uncertainty that has characterized trading over the past several weeks.
The midday upturn in sentiment can be tied to the reported exit of President Trump’s advisor Steve Bannon from the White House. Mr. Bannon’s assumed role on many of the Administration’s most divisive policy initiatives have in turn been blamed for distracting from the promised economic reforms that catalyzed the market’s post-election rally. As these controversies mounted in recent months, traders have appeared to grow weary over the possibility that corporate tax rates, infrastructure spending, and financial deregulation can be implemented before next year’s midterm election season. So while the news of Mr. Bannon’s exit gave an initial boost to bullish investors, the averages gave up their gains, and then some, as the closing bell rang.
Meanwhile, the value of domestic crude oil got a much-needed lift behind a five-rig decline in the United States. Still, the 3% rise in per-barrel price was not enough to offset recent selling pressures, which occurred due to a number of new and familiar factors. As has been the cases for some time, concerns over domestic inventories, overproduction overseas, and OPEC’s subsequent inability to sufficiently address this headwind, has challenged any modicum of optimism in the market. More recently, Chinese demand trends have given rise to new concerns. Investors are likely looking for sustained improvement on the supply front before pushing the commodity above the $50 per-barrel threshold.
By the close, the indexes had all slipped into negative territory. The Dow was the biggest laggard, weighed down by retail-related weakness from NIKE (NKE – Free NIKE Stock Report), dropping 76 points. Time will tell what the recent shakeup in Washington means as it relates to economic reform, with Friday’s even market breadth offering no clear verdict on where investors stand going into next week.
– Robert Harrington
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Mid-Day Update - 12:20 PM EDT
The U.S. stock market is putting in a mixed performance today, following yesterday’s steep selloff. At just past noon in New York, the market seems to be firming up to some extent. Specifically, the Dow Jones Industrial Average is still down 20 points; the broader S&P 500 Index is ahead by two points; and the NASDAQ is higher by 17 points. Market breadth is currently neutral, as decliners are just about even with advancers on the Big Board. The major stock market sectors are still divided, as strength in the technology and basic materials issues are offsetting weakness in select consumer and healthcare names.
Elsewhere, traders received just one notable economic report this morning. Specifically, the University of Michigan’s Consumer Confidence Survey came in with a preliminary reading of 97.6 for the month of August. This figure was better than most analysts had anticipated.
Finally, a number of widely followed corporations posted quarterly reports over the past 24 hours. Specifically, shares of Deere & Co (DE) are retreating today, after the heavy equipment manufacturer company delivered a mixed set of numbers. In the retail arena, shares of Foot Locker (FL) are plunging, after that company provided a weak release. Also in the retail arena, shares of The Gap (GPS) are encountering some selling, even though the apparel store operator delivered decent results. Conversely, shares of Ross Stores (ROST) are nicely higher after the off-price retailer reported quarterly results that are once again bucking the negative trend in the struggling sector.
Technically, stocks fell sharply yesterday, undermining several weeks of market progress. The selling also pushed the S&P 500 Index below its 50-day moving average. From here, it remains to be seen if the bulls and bargain hunters will be able to provide some support for equities. With the corporate reporting season largely over, traders will be likely looking more closely at domestic and global economic and political developments.
– 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
It has been another up-and-down week on Wall Street, with rising and falling confidence levels reflecting ever-changing geopolitical events and domestic affairs giving rise to elevated intra-session volatility. To wit, on Wednesday, we saw the stock market break to the upside initially, before giving back much of that gain later in the day on political concerns at home, notably the furor growing out of the President's reaction to last weekend's events in Charlottesville. An extension of these latter worries pulled equities down early yesterday and did so sharply. Also worrying traders was the flow of earnings reports from additional retailers.
In all, the Dow Jones Industrial Average, off moderately at the open and during the first half hour, fell further as we proceeded into the middle stages of the morning, surrendering 125 points at its low. In part, this reaction came in spite of the release of better-than-expected earnings from Dow component Wal-Mart Stores (WMT - Free Wal-Mart Stock Report). One analyst commented that this was not a blowout report. Also, the big chain reduced its 2017 guidance. In total, the second quarter, a good one, in general, for Corporate America, has been only a mixed affair for the nation's retail establishments.
As critical as earnings continue to be, even as reporting season draws to a close, it is the political situation in Washington that is yielding most of the shifting sentiment. On point, the Street has had to contend this week with the fallout from the President's dissolving of two advisory forums made up of some of the nation's top CEOs, a number of whom had announced departures in the past 48 hours. Those departures reflected dissatisfaction with Mr. Trump's aforementioned assessment of events in Charlottesville over the past weekend.
Regarding the economy, which always has an impact--although this week there has been less focus there given politics at home and the latest goings on with North Korea and now Barcelona--the Labor Department reported a nice drop in jobless claims in the latest week. Also, in a report issued moments before the open, the Commerce Department noted that industrial production gained just 0.2% in July. That was less than expected. But it was the situation in Washington, along with profits, which took an early measure of the bulls yesterday. In all, as we approached the morning's end, the stock market was decisively lower.
Things worsened as we moved into the afternoon, with the Dow's early loss of some 125 points ballooning to just over 185 points by the early afternoon. The NASDAQ, under even more pressure, fell back by 90 points as the session moved long, with losses spread all across the board. And then after word broke that there had been an attack in Barcelona killing 13 people, stocks fell further into the close. Meanwhile, as to Washington, stocks plummeted later in the day after word spread that Gary D. Cohn, the President's chief economic advisor was considering leaving the Administration. He quickly denied this story.
Still, the damage was done, and the market continued to descend, falling to the day's low at the close. In all, the Dow shed 274 points; the S&P 500 lost 38 points, or more than 1.5%; and the NASDAQ toppled at a session-worst 123 points, or 1.94%. Losses of well over 1.7% were suffered by the S&P 400 and the Russell 2000. Among individual groups, all 10 of the equity sectors ended lower, with just the utilities failing to fall a full 1%, or more. The telecom, technology, and basic materials groups did the worst, on a day that saw declining stocks overwhelm gaining issues with the late selling rush.
Looking out to the final day of the trading week, we see that stocks were notably lower in Asia overnight, while in Europe, where the impact of terrorist attacks is highest, stocks are falling sharply, as well, thus far this morning. Elsewhere, oil is pennies a barrel higher; gold prices are climbing; and Treasury yields are off, reflecting some flight to safety on geopolitical concerns. Finally, on our shores, after yesterday's dramatic late market selloff, trading in the futures is mixed so far.
– Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
