After the Close
On a day headlined by the Dow’s historic crossing of its 22,000-point threshold, U.S. equities traded in generally mixed fashion. Market breadth was negative, influenced by selling of small- and mid-cap issues that persisted to the closing bell. The broad-based S&P 500 and NASDAQ 100 spent the majority of the day in the red before mounting modest rallies in the final hours of the day to around their respective breakeven lines. The bearish tilt can be seen in the market sectors, with eight of ten groups posting losses for Wednesday’s session.
The Dow Jones Industrial Average’s push above 22,000 was propelled by Apple (AAPL - Free Apple Stock Report), which advanced roughly 5% on the day following an impressive earnings release. The tech behemoth reported higher iPhone sales and beat consensus share-net estimates by $0.10. The earnings front also saw AMC Entertainment (AMC), the world’s largest movie theater chain, shed 25% of its market value. In a pre-earnings filing, the company revealed a highly disappointing second quarter stemming from an anemic U.S. box office. Looking forward, the weakness is expected to persist, raising further doubts about the health of the exhibition sector at large. After the market closes, electronic carmaker Tesla (TSLA) will publish its quarterly performance, with investors looking for additional color on the forthcoming Model 3 sedan.
Meanwhile, U.S. crude oil bounced back from early morning pressure on its way to adding about 1% in per-barrel value on the day. The initial selling stemmed from a less-than-expected weekly drop in domestic inventories. Oversupply concerns at home, coupled with overseas production, have been one of two major headwinds weighing on the commodity market. The reaction to the miss underscores investors’ demand for accelerated stabilization in the industry. But the softness was short-lived, as traders eventually turned their focus on another figure from the Energy Information Administration’s weekly report. Weekly gasoline demand rose to 9.842 million barrels, a historic high.
So, as the final bell rang, the Dow settled 16 points above the 22,000 mark. The S&P 500 added a point, while the NASDAQ was essentially flat. We look for earnings to be the major factor influencing the remainder of the week’s trading, with Friday morning’s unemployment report from the Department of Labor also playing a role. There is some concern, following today’s slight miss in the private sector per ADP’s (ADP) payroll release, that the government update may embolden the bears at the end of the week. Stay tuned. – Robert Harrington
As of this article’s writing, the author did not hold positions in any of the companies mentioned.
Mid-Day Update - 12:10 PM EDT
The stock market is putting in a mixed showing today, helped by ongoing strength in the large blue-chip issues. At just past noon in New York, the Dow Jones Industrial Average is ahead 40 points, but the S&P 500 Index is down five points, and the NASDAQ is lower by 30 points. Market breadth is negative today, with losers easily ahead of winners on the NYSE. Most of the major equity sectors are in negative territory, with weakness in the consumer cyclical and basic materials issues. Meanwhile, utility stocks, often viewed as defensive holdings, are bucking the downtrend.
It was a light day for economic news, with just one main item reported. Specifically, according to Automatic Data Processing (ADP), 178,000 private sector jobs were added the nation’s economy in the month of July. Analysts had been looking for a slightly stronger figure. Tomorrow, the weekly initial jobless claims will be released, which should provide some additional insight into the broader employment situation. In addition, on Friday morning, the government will deliver its July employment report. That issuance will be closely watched, especially given Wall Street’s worries over the Federal Reserve’s monetary policy.
Meanwhile, second-quarter profits continue to be the main theme for traders. Over the past 24 hours, we heard from one of the world’s largest technology corporations. Specifically, shares of Apple Inc. (AAPL – Free Apple Stock Report) are trading higher today, as investors were pleased with the widely held company’s report. Elsewhere, after the market closes today, we will hear from another big name, when Tesla (TSLA) delivers its results.
Technically, stocks continue to make progress, as traders weigh a strong corporate outlook against some political uncertainty. – 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
After an unimposing start to the new week on Wall Street, traders got yesterday's session off to a strong start, with stocks roaring out of the gate quickly. To wit, the Dow Jones Industrial Average, fresh off of an all-time high on Monday, fashioned another early record yesterday, soaring up close to the psychologically critical 22,000 mark in the first few minutes of trading. The principal spark for the further gains of the core indexes has been a solid earnings season, which continued in the latest session. Also helping, from time to time, have been supportive economic results.
On this last count, at 10:00 AM (EDT) yesterday morning, the Institute for Supply Management reported that its key manufacturing survey had come in with a July result of 56.3. That was a fairly strong showing, but was still shy of the June tally of 57.8. Slower rates of improvement in new orders, production and employment, meantime, countered a sharp rise in price for the month. In all, this was a solid issuance, with 15 of the 18 manufacturing industries surveyed reporting growth in the just-concluded month. The market had little reaction to this result, with stocks continuing to gain on the day at that point.
All told, the market then continued to press higher, but there was some weakening in spots, especially among the smaller indexes, such as the S&P Mid-Cap 400 and the small-cap Russell 2000. As before the principal focus remained the corporate arena, with so many of the reporting companies easily beating expectations for the second quarter. The solid earnings season thus far, in which 73% of the companies domiciled in the S&P 500 Index had surpassed earnings expectations for the latest period has been a big part of the continuing bull market in 2017.
Meantime, after this brief mid-morning lull, the stock market picked up somewhat again as the morning progressed, with the Dow pressing ever closer to the 22,000 mark. Lesser advances were being posted by the other indexes, although the Russell 2000 was still in the red. However, there was little enthusiasm in this pricey market to make a full-fledged run at 22,000 in the Dow just yet. So we stayed higher, but just modestly so, on balance, as the morning concluded. As we passed the noon hour in New York, the Dow was the strongest performer on the day, with a mid-session gain of some four tenths of a percentage point.
The stock market then meandered about in generally higher territory through the early to middle hours of the session, boosted by some generally supportive profit reports, along with a few misses or lackluster guidance. All the while, the Dow was unable to reach the 22,000 level. This pattern then continued into the close, with the session ending with the Dow holding a gain of 73 points. Lesser increases were tabulated by the S&P 500 Index (up six points) and the NASDAQ (ahead 15 points).
Then, after the close of trading iconic technology stalwart Apple Inc. (AAPL - Free Apple Stock Report) issued better-than-expected fiscal third (June) quarter results. Not only did Apple beat the consensus, but the tech giant gave investors something to cheer as they looked ahead to the next few months. On point, Apple sold more iPhones than expected and gave upbeat fourth-quarter guidance. The stock, already on the cusp of record highs, then surged in after hours trading, and seems poised to open higher this morning, a trend that should give the market an overall early lift this morning.
In fact, U.S. equity futures, in general, are moving higher in pre-market action today, implying that the Dow Jones Industrials will possibly cross the 22,000 line this morning. Elsewhere, stocks in Asia were mixed overnight, though there was nice strength in the tech issues following the Apple beat, while in Europe the major bourses are trading lower in the early going. In other markets, oil is flat; gold is a little lower, backing away from a seven-week high; and Treasury yields are nominally higher. – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
