After The Close
The stock market made notable progress this morning, and managed to maintain most of these gains through the afternoon. At the close of trading, the Dow Jones Industrial Average was ahead 61 points; the broader S&P 500 Index was up 17 points; and the NASDAQ was higher by 80 points. Market breadth was quite supportive, with winners nicely ahead of losers on the NYSE. All of the major equity sectors pressed ahead, with sizable gains in the energy and technology names.
Meanwhile, a couple of economic reports were released this morning. Specifically, according to the second estimate, the nation’s GDP expanded at an annualized rate of 4.2%, during the June quarter. This reading was a bit stronger than had been anticipated, and suggests that, despite turmoil on some fronts, the domestic economy is still humming along. Elsewhere, pending home sales slipped 0.7% during the month of July, where a better figure had been expected. Tomorrow, personal income and spending numbers for the month of July will be released, along with the latest weekly initial jobless claims figures.
In the corporate arena, we have heard from a few retailers over the past 24 hours. Of note, shares of American Eagle Outfitters (AEO) moved lower today, after the apparel company posted respectable numbers, but provided lackluster guidance. In addition, shares of Movado Group (MOV) sank, even though the watchmaker delivered a respectable report.
Technically, equities have managed to forge ahead over the past several sessions, and are set to wrap up the month of August on a high note. In the weeks ahead, traders will likely be looking for assurances that global trade challenges will not hamper the economy on our shores.
- 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
Fresh off strong performances by the stock market this past Friday and again on Monday, Wall Street's bulls again pressed forward with impressive strength yesterday morning. Once again, it was optimism on the trade front that excited the bulls. In this case, it was the deal struck on Monday with Mexico that helped to propel stocks higher. However, unlike Monday, the gains were certainly not electrifying. To wit, the opening session of the week quickly saw the Dow Jones Industrial Average jump out to a 200-point gain on the way toward a 259-point advance on the day.
Yesterday, by comparison, the early increases fashioned by the 30-stock blue-chip composite was in the area of 70 points. That was meaningful, to be sure, buy hardly memorable. Meanwhile, the S&P 500 Index, which has been securing one all-time high after another, rose above 2,900 for the first time ever yesterday, while the NASDAQ, also no stranger to records, pushed further above 8,000 in the morning. The deal struck with Mexico, meantime, helped to brighten the overall outlook on trade, although difficulties linger with China, Europe, and Canada.
As to other reasons for this late-summer’s strength, there are earnings, which continue to advance; there is the economy, which also is doing well, on balance, and there is the sense the Federal Reserve will keep its cool and raise interest rates only incrementally in the coming months. So, stocks drifted higher yesterday morning. All the variables to keep the market going were cooperating, with the last holdout, the global trade situation, starting to look better, as the days go by. As to the agreement with Mexico, the accord is designed to replace NAFTA, which includes Canada.
The Administration has suggested that a deal could, in fact, be implemented soon with Canada, but that an effort along these lines may not take place in the short run. But even just an accord with Mexico appears to be satisfying Wall Street enough to send stocks higher. And after that modest start, the market continued to press forward yesterday, but in baby steps, as the averages remained high, for the most part, through the morning and into the middle of the afternoon. As noted, our sense is that a deal will be struck with Canada. Getting something done with China will be more difficult, we sense.
In other news, the Conference Board reported that its survey on consumer confidence had gained strongly in August, rising from July's tally of 127.9 to 133.4. Expectations had been for a slight softening in this thus far resilient metric. Also improving were the two other components, the Present Situations Index (166.1 to 172.2) and the Expectations Index (102.4 to 107.6). In all this survey registered its higher reading since October 2000, when a score of 135.8 was generated. The stock market, focused on trade and Mexico, reacted little to this survey when it was released in the morning.
Meantime, the market, which paused around the middle of the day, actually going negative very briefly, picked up some momentum heading toward the close. But that buying spurt proved brief, and, in fact, the averages dipped into the red momentarily in the final few minutes of trading before a several-minute buying spurt lifted the averages back into the black among the large caps. All told on this mixed day, the Dow would finish ahead 14 points; the S&P 500 would add less than a point; and the NASDAQ would climb 12 points. However, both the small-cap Russell 2000 and the S&P Mid-Cap 400 would end nominally below the breakeven line.
Looking out at the middle day of the trading week, we see that the major indexes across Asia were mixed in the overnight session, while in Europe, the bourses are trading a tad lower at this hour. Elsewhere, oil, which eased yesterday, is little changed so far this morning; yields on the 10-year Treasury note, which ended at 2.88% yesterday, are now at 2.87%; and U.S. futures are signaling a somewhat higher opening when trading resumes later this morning.
– Harvey S. Katz, CFA
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
