After The Close
The stock market pressed ahead today, extending the gains logged over the past several sessions. At the close of trading in New York, the Dow Jones Industrial Average was ahead 39 points; the broader S&P 500 Index was up three points; and the NASDAQ was higher by nearly seven points. Nonetheless, the session was somewhat divided, with advancers outnumbering decliners by a thin margin on the NYSE. From a sector perspective, the telecom, financial, and technology names made progress, offsetting weakness in the healthcare and utility issues.
Elsewhere, there were a few economic news items released this morning. Specifically, housing starts came in at an annualized rate of 1.18 million units during the month of August. This reading, while slightly lower than the July figure, was a bit better than had been anticipated. It should be noted that building permits during the period were quite strong, which is a positive indication. Tomorrow, we will get another look at the housing market, as the existing home sales for the month of August are due to be released. Further, in the afternoon, the FOMC will conclude its two-day meeting with an interest-rate decision and some prepared remarks from Federal Reserve Chair, Janet Yellen.
Meanwhile, a handful of corporations delivered their financial results over the past 24 hours. It is worth mentioning that shares of AutoZone (AZO) moved lower, even though the auto parts retailer posted a respectable report. Meanwhile, shares of Steelcase (SCS) moved up, as investors were pleased with the furniture manufacturer’s latest numbers. After the closing bell today, we hear from Adobe Systems (ADBE) and FedEx Corp. (FDX).
Technically, the market remains quite strong. In addition to looking at the corporate environment, traders may be anticipating that the current Administration will be able to advance some business-friendly measures in the coming months. In other areas, the situation with North Korea remains a source of uncertainty.
— Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Mid-Day Update - 12:00 PM EDT
The stock market, which rose modestly yesterday, but still managing to move into record-high territory in the process, climbed a bit further up the new-high ladder this morning, with each of the major U.S. equity averages pressing higher at the outset. These initial gains came on the heels of mixed performances in Europe this morning and somewhat weaker showings in Asia overnight. Against this relatively subdued backdrop, oil edged down slightly, even as OPEC appeared ready to maintain lower output levels, Treasury yields nudged a little higher, and gold changed little in price.
As for Wall Street, this initial bounce, which saw the Dow Jones Industrial Average move up by close to 40 points at the outset of the trading day, had partly been overcome as the morning wound down. True, the Dow was holding onto much of that nice early advance, but the S&P 500 Index was up just nominally in late morning, after having been ahead more so at the start, while the NASDAQ, once up 13 points, was just barely at the breakeven mark. This directionless market could be seen in the advance-decline ratio, as well, which saw an even breakdown between gaining and losing issues on the NYSE and the NASDAQ.
Regarding market influences so far today, the United Nations is in session and there always is the possibility of a surprise there, while the Federal Reserve has begun its two-day FOMC meeting this morning. That get together is likely to conclude with the central bank holding the line on interest rates, but moving forward with its balance sheet reduction. As to interest rates, the Fed has raised borrowing costs twice this year, and the odds seem to be about even that it will vote a third hike later this year--most likely during December if it goes that route at all.
In other news, the Commerce Department released data this morning showing that privately-owned housing starts in August were at a seasonally-adjusted annual rate of 1,180,000 homes. That was just nominally below the July tally of 1,190,000. However, the latest figure was a little above the year-early housing tally. Importantly, building permits, a more forward-looking metric came in at a seasonally-adjusted rate of 1,300,000 units in August--5.7% above the July results of 1,230,000 homes. This category augurs well for building down the road and thus should prove supportive to the economy, overall.
So, as we get ready for the afternoon, we see that the market is in a mixed to nominally higher mode now and could well be poised, absent any surprises coming out of the U.N., to rally somewhat during the final hours of trading. Stay tuned.
— Harvey S. Katz, CFA
As of this article’s writing, the author did not hold positions in any of the companies mentioned.
Before The Bell
The Fed meeting will probably conclude tomorrow with a monetary statement that will outline a monetary policy for the rest of the year along with designs for winding down its asset buying program. In the meantime, the key averages all hit new highs yesterday morning, with Caterpillar (CAT - Free Caterpillar Stock Report) among the Dow standouts on an upgrade from a brokerage house. In addition to this stock, the market also was powered higher by strength in the industrial group, in general, along with the financial and technology stocks.
Regarding North Korea, the relatively quiet situation was given some further soothing from comments by Secretary of State Rex Tillerson, who intoned that a peaceful solution could yet be reached in dealings with that country. The mollifying comments clearly helped bring some heretofore reticent investors back into the market. So, with North Korea a little less aggressively in the picture for the moment, the focus will be on the Fed, where the news is likely to be generally supportive. Thus, the market's strong start to the new week.
In all, as the afternoon began, the Dow was maintaining its morning highs, with the NASDAQ and the S&P 500 Index also doing well, with respective gains of 26 and six points to that juncture. In addition, stocks and the dollar both rose in global market dealings earlier in the day, while oil was lower after rallies last week. Further, gold prices and Treasury yields were rising in advance of the Fed gathering. The uptrend persisted as the afternoon began, with stocks holding very near their morning-best levels.
The market then continued higher into the balance of the afternoon, with the advance, albeit not dramatic, quite broad, finally encompassing eight of the 10 key equity groups, with just one of the laggards, the utilities, exhibiting much weakness, as investors sought out riskier assets. Also, the final tally among the individual issues showed that four stocks rose for every three that backtracked. Meantime, in addition to Caterpillar, another winner on the day was aerospace giant Boeing (BA - Free Boeing Stock Report).
When all of the numbers were in, the market had finished up fairly near the best levels of the day on the Dow, with that index climbing by 63 points. However, the NASDAQ, once ahead by almost 30 points, concluded matters ahead by just six points. Also, the S&P 500 Index, in the plus column by eight points in early afternoon, retained less than half that earlier gain. Still, each of the indexes ended the session with records in the books, as Wall Street readies for what we think will be a supportive two-day Fed get together.
Looking out to a new day now, we see that stocks were mixed in early trading in Asia today, while in Europe, the major bourses are posting some early sluggishness. In other trading, the oil markets are firmer; gold prices, up yesterday, are now ahead slightly so far today; and Treasury yields, also up in dealings yesterday, are off a bit thus far this morning. Finally, the U.S. equity market is now suggesting a generally higher open, when trading resumes at 9:30 (EDT) this morning.
