After The Close
Stocks got off to a constructive start this morning, but encountered some pressure as the session unfolded. At the close of trading, the Dow Jones Industrial Average was ahead about 87 points; but the broader S&P 500 Index was off nominally; and the NASDAQ was lower by 41 points. Meanwhile, market breadth showed a mixed session, with advancing issues roughly even with decliners on the NYSE. The major equity sectors were divided, with gains in the utilities and the industrials, offset by notable losses in the technology names.
Elsewhere, there were no major economic reports released this morning, and that may explain the somewhat quiet tone to today’s session. However, the pace should pick up considerably next week. Specifically, on Wednesday, the Federal Reserve will conclude its two-day FOMC meeting with an interest-rate decision, and provide some prepared remarks. Given the economic progress achieved over the past several months, a small (0.25%) interest-rate hike will likely be approved. Such an outcome probably would not come as a major surprise to traders.
In corporate news, shares of Micron Technology (MU) traded lower today, after the semiconductor manufacturer provided a lackluster outlook. Investors are likely worried that recently implemented trade tariffs will put pressure on results of technology companies that have business ties to China. The weakness in Micron shares likely contributed to the decline on the NASDAQ today. Elsewhere, shares of Steelcase(SCS) moved up after the furniture maker posted a solid report.
Technically, stocks continue to make progress, as traders remain upbeat about the U.S. economy. Looking ahead, the third quarter will draw to a close in the coming days. Many traders on Wall Street will be looking to the numerous corporate reports that will soon follow for updated guidance and a better sense of direction.
- 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
A sense that perhaps the trade skirmish with China may not be as sizable as some have feared, as neither side seemingly wants to push the envelope too far, helped the stock market get off to a roaring start yesterday morning. And because of that early lift, the Dow Jones Industrial Average moved out to an all-time high, surpassing the January peak. The S&P 500 Index also jumped to a fresh high. Gains in some high-profile technology stocks, notably Apple (AAPL – Free Apple Stock Report), the equity with the largest market capitalization, led the charge higher by the blue chip composite early on, with that index soaring by nearly 250 points in the first hour of trading.
Also outperforming in the early action were two industrial giants in the Dow, namely Boeing (BA – Free Boeing Stock Report) and Caterpillar (CAT – Free Caterpillar Stock Report). Shares of each rallied on those lessened trade fears. The ascension of the Dow to a record high, following such a breakout by the Dow Jones Transports the week before, is seen by many as a confirmation of a bullish trend. Although the trade fears have apparently lessened for the moment, it should be noted that China has said that it hopes the United States will now take steps to correct its behavior. All the while, the market continued to rally, with the Dow's advance remaining north of 200 points into the late morning.
In other news, just one day following the government report showing a solid increase in housing starts during August, the National Association of Realtors (NAR) reported that sales of existing homes had held steady in August; a small gain had been forecast. In all, sales increases in the Northeast and the Midwest canceled out downturns in the South and the West. In all, sales came in at 5.34 million units on an annualized basis. a modest uptick, to 5.38 million homes had been forecast. The NAR opined that sales appear to have hit a plateau, but at a high level.
This unimposing report did little to dent the reigning optimism on the Street, however, as the news on the trade front kept equity buyers active for one more day, with the Dow holding up near the day's best levels as the afternoon moved along. In all that key composite remained some 250 points to the good and in record territory as we moved inside the final 90 minutes of trading on this penultimate session of the week and ahead of next week's Federal Reserve FOMC meeting, which is likely to see another interest rates increase. That would make it three such hikes this year and four since last December.
The buying continued into the latter stages of the afternoon, with the Dow's gain approaching 300 points, as we moved still further into the afternoon. As before, optimism on trade and the added momentum following the records set by the Dow and the S&P 500 Index helped the latest rally on Wall Street to continue. Indeed, even with some nominal late selling, the Dow's final advance of 251 points was just a scant 40 points below its best levels of the day. The S&P 500, up 23 points at session's end, was just four points below its best level of the day. The NASDAQ, up 78 points, and the small-cap Russell 2000, ahead 17 points, rounded out the day.
Now, to close out the week, Friday will feature no economic news of any note, following the two key housing reports earlier in the this five-day span. What we will see is more positioning on trade matters and the back-and-forth on monetary sentiment ahead of next week's FOMC meeting. As to the markets in the overnight, we saw nice gains in Asia, while in Europe this morning, we are looking at a positive bias. In other news, oil prices are up and yields on the 10-year Treasury note, which eased to 3.08% yesterday afternoon, are at 3.08% once again this morning. Finally, following yesterday's fireworks, the U.S. equity indexes started the day off strongly, but some of the averages have turned mixed.
- Harvey S. Katz, CFA
