After The Close
The major U.S. equity indexes spent the entirety of today’s session in the green, as stocks continued their march back to record territory.
With no market-moving news to speak of, and second-quarter earnings season mostly in the rearview mirror, investors are looking ahead to tomorrow, when the minutes from last month’s Federal Reserve meeting will be released. The Fed’s annual Jackson Hole, Wyoming conference then kicks off on Thursday, and all ears will be tuned in to Federal Reserve Chairman Jerome Powell’s speech on Friday, particularly after recent reports of President Trump’s dissatisfaction with this year’s rate increases. Meanwhile, talks between the U.S. and China are set to resume on Wednesday. While investors hope that the threat of a trade war, which has weighed on the markets this year, will begin to dissipate, President Trump recently commented that he had low expectations for a resolution.
At the closing bell, the 30-stock Dow Jones Industrial Average was up 64 points (0.3%) while the broader S&P 500 (after hitting an intraday record) was ahead by six (0.2%). The NASDAQ fared the best of the lot, gaining 38 points on the session, or 0.5%. Most of the 10 major market sectors ended the day in positive territory, led by telecommunications and consumer cyclicals, which gained about three-quarters of a percentage point. Defensive stocks were the laggards today, with utilities down 0.6%, and consumer noncyclicals off by 0.5%. Altogether, advancing issues outpaced declining stocks by better than two-to-one.
Elsewhere, light sweet crude prices advanced 1.3%, to $67.30 a barrel. This marked a fourth-straight up day for the commodity, as sanctions on Iranian oil exports (set to start in early November) loom. Lastly, trading was mixed on the European bourses today. France’s CAC-40 led the pack with a gain of 0.5% while Germany’s DAX tacked on 0.4%. The UK’s FTSE 100 shed about one-third of a percent.
– 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
Two and three weeks ago, the focus on Wall Street was on second-quarter earnings, which generally were good, and the stock market rallied. A week to ten days ago, the attention had shifted over to Turkey and that struggling nation's plummeting lira, its currency, and stocks retraced some of their earlier gains, especially the Dow Jones Industrial Average. Now, investors have altered their focus yet one more time. In this case, they are looking at trade relations with China and rising hopes for some accommodation, and the indexes are rising again.
So, after a big day on Thursday, on those raised trade hopes and a follow-up advance on Friday, the market began the new week heading modestly higher once more. To be sure, trade talk plans are still evolving and there is no assurance that any goals will be reached. However, just the possibility that a thaw in the recent tensions between the world's two largest economies could be ahead has been enough to propel stocks to fresh gains and the S&P 500 to a near record. A pickup in merger activity also helped get the ball rolling early.
And, as far as the day was concerned, the market really did get into gear, but mostly in regard to the Dow, which quickly climbed to a gain north of 100 points. However, the tech-laden NASDAQ, which is understandably much less affected by trade, as the proportion of domestically oriented companies in that composite is much higher than it is for the multi-national-oriented Dow, actually declined slightly after the first half hour of trading. The market then would stay range-bound for the remainder of the morning.
As we moved into the early part of the afternoon, things stayed more or less status quo, with the Dow still up in the 100-point range and the NASDAQ continuing to dance around the neutral line, while the S&P 500 remained modestly in the black. Leading the market selectively higher were the energy, industrial, and basic materials stocks. Overall, the stock market had a positive tone to it as nine of the 10 top groups were in the green and advancing stocks were all over decliners on the NYSE to the tune of more than two-to-one.
The advance continued into and through the afternoon with neither much additional strength, nor any backtracking of note, as optimism about trade, falling interest rates and confidence that the nine-and-a-half year long bull market would persevere a while longer. Also buoyed by an increase in merger & acquisition activity and additional expectations that the economy would continue to press forward throughout the current half, the market continued to advance at a solid opening-session pace in the new week.
As the final bell, sounded, the upturn was still in place and stocks were near their best levels of the day. In all, the Dow was ahead 90 points; the S&P 500 was better by seven points; and the NASDAQ was in the plus column by almost five points. Meantime, all of the key sectors save for the utilities were higher, with the industrials, energy, and basic materials still in the lead as they had been at mid-session. Also, gaining stocks led decliners by about a 12-to-5 ratio on the Big Board.
Looking ahead to a new day, we see that shares were higher in Asia in the overnight session, while in Europe, the Continent's bourses are now trading in the plus column, as well. Also, oil prices are now climbing and yields on the 10-year Treasury note, which concluded matters yesterday at 2.82%, are now trading at 2.84%. Finally, the equity futures on our shores are suggesting a higher opening when live trading resumes ahead of talks between China and the United States later this week and the Fed's Jackson Hole WY meeting.
– Harvey S. Katz, CFA
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
