After The Close
The stock market put in a choppy, but somewhat constructive, session today. Of note, this was the last trading day of the month and the third quarter. At the close of the day, the Dow Jones Industrial Average was ahead 18 points; the broader S&P 500 Index was down nominally; and the NASDAQ was higher by four points. Market breadth was positive, with advancers just ahead of decliners on the NYSE. From a sector perspective, the defensive healthcare and utility issues moved nicely higher, while the financial names lost ground.
Traders received a few economic reports this morning. Specifically, personal income rose 0.3% during the month of August, with a corresponding increase in personal spending durTSLAng the period. These figures, more or less, met expectations. Meanwhile, the Chicago PMI came in at 60.4 for the month of September, which was slightly lower than the consensus forecast. Elsewhere, the University of Michigan’s consumer sentiment survey’s was finalized at 100.1 for September, which was a healthy reading.
In corporate news, shares of BlackBerry Limited (BB) rose sharply after the communications equipment maker delivered better-than-anticipated results. However, shares of Tesla (TSLA) sank on reports that the SEC plans to take action against the company’s founder and CEO, Elon Musk.
Technically, stocks made solid progress during the third quarter. Looking ahead, numerous companies will be issuing their quarterly results in the coming weeks. While traders will be looking closely at the latest reported numbers, the guidance provided for the final months of the year will be quite important, as well.
- 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
Wall Street will shortly bring down the curtain on what has been a stellar third quarter for the U.S. stock market, with notable gains in all of the major indexes, particularly the large-cap Dow Jones Industrial Average, the Standard and Poor's 500 Index, and the tech-laden NASDAQ. In all, the early showing on this penultimate trading session of the quarter, would appear to have the makings of some fairly strong momentum heading into the final three months of the year. As to yesterday's showing, the early gains followed an especially weak performance down the stretch on Wednesday.
Leading the way higher early yesterday was a better-than-five dollar a share surge in the shares of Apple (AAPL – Free Apple Stock Report). That uptick comes on the heels of a positive brokerage house report. The Apple gain clearly boosted the NASDAQ, which climbed by about two-thirds of a percentage point as the first hour ended. According to the report on Apple, the company was transforming from a hardware to a services company faster than investors had expected. Other big tech names also pushed ahead to nice early gains. The solid initial advance in the equity market followed a bearish close after the latest Federal Reserve FOMC meeting concluded.
That get together ended with another 25 basis-point interest rate increase and a somewhat more hawkish statement by the central bank, in which it removed the word accommodative to characterize its approach on the monetary side. Expectations are that the Fed, which has hiked interest rates three times already this year, will vote in a fourth rate increase in December and then opt for as many as three additional raises in 2019. However, yesterday's strong morning suggested that the Street was in the midst of another reappraisal. Meantime, the gains continued with the Dow closing in on a better-than-120-point rise as the second hour began.
It would seem that Fed watchers have, for now, come to the conclusion that the lead bank will continue to raise interest rates in a slow, measured manner so as not to prove disruptive to the long-running business expansion. Meantime, on the subject of the economy, the government reported that revised second-quarter gross domestic product showed a 4.2% advance, matching the consensus expectation and the earlier revision. Our sense is that the upturn remains strong enough for GDP to climb by some 3.5% in the fast-ending three months. A growth rate of 3%, or better, would seem likely in the final stanza.
The good morning performance then continued into the lunch hour and beyond, with the Dow's advance surpassing 170 points shortly before 1PM (EDT). Then, some modest retracement took hold, with that composite's gains easing back to just about 100 points as we entered the final two hours of the trading day. The NASDAQ's advance, however, held near session highs to that point. The market then eased back some more as we moved into the final hour of trading, with the Dow's increase pared to fewer than 100 points.
The selling then continued down the homestretch, with the Dow, once up by the aforementioned 170 points, finally ending matters ahead a more modest 55 points. Meantime, the S&P 500 Index gained eight points; that, too, was well off its session highs; and the NASDAQ added 52 points. The S&P Mid-Cap 400 and the small-cap Russell 2000 stayed close to the neutral line, while gaining and losing stocks on the Big Board fought it out, with advancing issues ahead modestly. Finally, in individual names, less-than-stellar profit performances from Bed Bath & Beyond (BBBY) and ConAgra (CAG) caused both stocks to falter badly on the day.
Looking out to a new day now, we see that shares in Asia were nicely higher in overnight dealings, but in Europe, the major bourses are showing losses in the early going. Also, oil prices are flat so far today, while yields on the 10-year Treasury note, which held fairly steady at 3.06% yesterday, are now passing hands at 3.03%. As for stocks, and ahead of a report on consumer sentiment, the U.S. equity futures are poised to start the new session and the final trading day of the third quarter with losses.
– Harvey S. Katz, CFA
