After The Close
The futures market started positively, as a de-escalation of trade tensions between the U.S. and China occurred overnight. The United States stated that it would delay some tariffs on goods from China from October 1st to October 15th “in a gesture of goodwill.” Additionally, China’s Ministry of Commerce stated that Chinese companies have started asking about the prices of agricultural goods. So, the stock market started the day higher, and the Dow Jones Industrial Average was up by 132 points quickly, while the other indices were higher in tandem. Early trading was categorized by choppy results, as the markets moved up and down for a time. The down portion was partially attributable to a senior White House official casting doubt on an interim U.S.-China trade pact. After the composites consolidated, they broke out to the upside, and the Dow traded just under all-time highs. The NASDAQ and S&P 500 also traded within 1% of their highest levels. In the final part of the session, the markets gave back a large portion of the daily gains. All told, the Dow closed higher by 45 points, the S&P 500 was up nine points, and the NASDAQ increased 25 points.
Moreover, market breadth was slightly positive, as advancers outpaced decliners by a 1.4-to-1.0 ratio. Materials stocks were among the best performers today, while energy stocks were laggards.
In commodity news, oil prices were lower today, as worries about a trade deal and a lack of supply cuts from OPEC hit the news cycle. Meantime, U.S. Treasury bond yields were higher today, as a move away from the safe-haven asset occurred. The VIX Volatility Index was lower, as demand for options protection receded.
Looking ahead to tomorrow, the economic slate will be highlighted by retail sales data for August. The preliminary Consumer Sentiment Index for September also is on the docket. The earnings slate is emptier, suggesting that trading tomorrow will focus on economic and trade developments.
– John E. Seibert III
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell
The stock market opened to the upside yesterday, as shares of tech icon Apple (AAPL – Free Apple Stock Report) posted additional gains after the company introduced a slew of new products. The early strength helped the Dow Jones Industrial Average move past the 27,000 mark late in the morning. The solid advance in Apple, in particular, helped to boost the tech-laden NASDAQ. Overall, the equity market gained ground steadily, with the blue-chip index moving ahead by just over 100 points as the morning ended and the afternoon got under way. The best performer on the session to that point was the NASDAQ, which climbed 70 points.
In all, it was a steady climb to the upside by the market, with most issues rising in price. Meanwhile, in economic news, on this otherwise light day for government releases, the Producer Price Index rose a scant 0.1% in August. A similar nominal increase had been the forecast. As to the impact of this benign inflation report, it probably does not move the needle much, as expectations for a Fed interest-rate cut of 25 basis points remain quite high, with more than 90% of pundits looking for such a reduction when the central bank's FOMC meeting takes place next week.
In other news, optimism continued to run in place on the trade front, where expectations are that the forthcoming meetings with China will edge the two nation's closer to a lessening in tensions. In still more events, Wall Street was buzzing by comments from the President in which he espoused a more aggressive program by the Federal Reserve to reduce interest rates--even to the point that they go negative. The commentary was timed, no doubt, with the FOMC meeting scheduled for next Tuesday and Wednesday in mind. It is not apparent what impact such pressure will have on the central bank, if any.
Meanwhile, the equity market continued to climb, with the Dow's gain surpassing 150 points as we moved ahead to the mid-afternoon. The NASDAQ's advance was even stronger, although down a little from the morning, as Apple shares continued to trade more than $5.00 higher on the day. The afternoon gain came after China announced that it would be suspending additional tariffs on some American imports. The market also was awaiting the latest interest rate decision from the European Central Bank, with that decision being imminent. Also rising at this time was the yield on the 10-year Treasury, to 1.73%.
The stock market's drift higher then would continue as the afternoon wound down, with the Dow again moving up to and this time well past the 150-point gain marker, with that composite ascending straight into the close, showing a 228-point gain. Advancing stocks, meanwhile, would hold a formidable lead on declining issues, with a ratio of 2.3 to 1.0 near the close. The advance was also broad as far as the other indexes were concerned, with the S&P 500 climbing by 22 points at the conclusion of trading, while the NASDAQ, up strikingly from the start, would add 86 points.
Looking ahead to the new day now, we see that the major indexes were higher in Asia overnight, while in Europe, with all eyes on the ECB, the early tally is mostly positive, as well. In other markets, oil prices are ticking slightly lower; Treasury note yields are off nominally; and U.S. equity futures are suggesting a positive opening for the market when trading resumes later this morning.
– Harvey S. Katz, CFA
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
