After the Close
U.S. equities started the day on a solid up note and then largely proceeded to climb steadily higher as the session wore on. Traders appeared to put aside the political concerns both here and abroad that had weighed on the markets in recent weeks.
Altogether, the Dow Jones Industrial Average gained 196 points, marking its best showing in almost four months. Meanwhile the broader S&P 500 Index was up by 24 points. Both gained about 1.0%. However, they were topped by the tech-laden NASDAQ which, with its first up day out of the last five sessions, pushed ahead 84 points, or 1.4%.
Market breadth was positive, with gainers outnumbering decliners by a greater than two-to-one ratio on the key exchanges. Taking a look at the major market sectors, most were decidedly in the green, led by technology issues, which were up 1.6%. Meanwhile, basic materials, consumer cyclicals, and healthcare issues all advanced by about one percent. The laggards for the session were consumer noncyclicals and utilities, whose gains were limited to around a quarter percentage point each.
The final numbers from the key European bourses were equally ebullient, led by Germany’s DAX with a 1.4% advance. France’s CAC-40 and the U.K.’s FTSE were not far behind, each up a little less than a percentage point.
Elsewhere, crude oil prices edged up over half a percentage point, likely on expectations that tomorrow’s report on domestic inventories will show an eighth-straight weekly decline. However, any further gains are likely to be short-lived, as estimates for U.S. shale production suggest new highs are just around the corner.
While today was light in terms of economic news, traders tomorrow will be examining the latest figures for new home sales, where a sequential increase appears to be the consensus. Investors will then turn their attention to the annual conference of central bankers in Jackson Hole, Wyoming, which kicks off Thursday. – Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Mid-Day Update - 12:15 PM EDT
The U.S. stock market opened strongly higher this morning, and has managed to build on these early gains. At just past noon in New York, the Dow Jones Industrial Average is ahead 150 points; the broader S&P 500 Index is up 19 points; and the NASDAQ is higher by 70 points. Market breadth is favorable, with winners well ahead of losers on the NYSE. Most of the major equity groups are forging ahead, with sizable gains in the technology and basic materials issues. In contrast, the defensive utility stocks are declining a bit, as traders may be feeling less risk averse, for now.
Elsewhere, there were no major economic reports released this morning. Tomorrow, new home sales for the month of July are due out. For traders following the energy markets, the EIA will release the latest weekly crude oil inventory numbers. Meanwhile, traders are also looking ahead to the end of the week. On Friday morning, Federal Reserve Chair Janet Yellen will deliver some remarks at an economic symposium in Jackson Hole, Wyoming. Many on Wall Street will be looking carefully at this speech, in an effort to gain insight into the Fed’s monetary policy.
Finally, a handful of corporations weighed in with their financial reports over the past 24 hours. Specifically, in the healthcare arena, shares of Medtronic (MDT) are trading lower today, after the medical device manufacturer delivered a mixed release. In the housing space, shares of Toll Brothers (TOL) are also off, after the homebuilder posted solid profits, but a somewhat softer-than-anticipated top line.
Technically, stocks have pulled back considerably since the start of August. Today, bargain hunters appear to entering the market, which is providing some support. The S&P 500 Index is now just below its 50-day moving average, located at 2,450. Pushing this broadbased index above this key technical area is likely the next challenge for the bulls. – 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 a pair of down days last Thursday and Friday, with the former session really seeing stocks hit the skids, Wall Street opened the first trading day of the new week suffering additional modest declines. And once again, it seems to have been less a case of economic or earnings issues and more a matter of concerns about the direction of the Administration's agenda and the outcome of geopolitical events. Also, stocks were still due for some more profit taking even after the aforementioned declines last week.
So, as noted earlier, the Street stumbled at the open, with the Dow Jones Industrial Average dropping more than 70 points in the early going, with particular weakness in technology and the financial stocks. Overall, though, gaining and losing stocks were about even as the morning progressed, while there was about an even split, as well, among the various equity sectors. The losses, encouragingly, then proceeded to moderate as the morning wound down and we approached the noon hour on the East Coast.
The focus on the Administration's current woes seems to be a case of the nation's economy being now less of an immediate concern, as growth is still strong enough to keep the Federal Reserve on course to shrink its balance sheet and not too strong, especially with inflation remaining below the Fed's 2% target, to induce the central bank to aggressively step up its monetary tightening program. In fact, an interest rate hike in December, once thought of as almost a given, is now considered to have less than a 50% chance of getting done.
Meanwhile, the market meandered about, with certain groups, such as the telecom stocks, performing well, while major retailers, notably shoe and apparel maker and Dow component, NIKE (NKE – Free NIKE Stock Report) again doing poorly. Also, some big tech names faltered once again. So, among other things, there's also sector rotation taking place. Interestingly, the small-cap Russell 2000 opened the initial session of the week down for the year, while the large-cap indexes all held gains. Finally, oil again was a depressant, as crude prices started the week lower.
The stock market then seesawed during the early afternoon, with the Dow generally holding slightly on the plus column, while the NASDAQ and the Russell 2000 mostly held modestly in the loss column. As before, the major groups were divided, although there was a somewhat more positive tilt to things as the afternoon wore on. The market took on a bit more upbeat look to it after the solar eclipse passed in mid-afternoon, at which time the Dow moved more clearly and durably into positive territory.
The market's selective firming then continued into the close, with the Dow finally ending the session sporting a near-session best increase of 29 points. The S&P 500 Index was ahead by three points, while the NASDAQ, once off more than 30 points, closed in the red by just over three points. Moreover, eight of the main market groups held gains at the day's end, while advancing and declining stocks were about even on the Big Board. Losing stocks held the lead on the NASDAQ, though, as some weakness in tech persisted.
Looking out at a new day now, and casting our sights abroad, we see that stocks were mostly higher across Asia in the overnight hours, while in Europe, the leading bourses are thus far moving forward on a positive early note. What's more, oil, off by more than a dollar a barrel on West Texas Intermediate yesterday, is edging up so far this morning, while gold, a winner to start the new week, is now down. Further, bond yields are somewhat higher, after falling in a flight to safety to open the week. Finally, U.S. futures are showing pre-market strength. – Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
