After The Close - Stocks put in a choppy, and ultimately weak session today. At the close of trading, the Dow Jones Industrial Average was down about 113 points; the broader S&P 500 Index was off seven points; and the NASDAQ was lower by seven points, as well. Decliners outpaced advancers on the NYSE, showing some underlying weakness to the session. The energy, healthcare, and basic materials issues moved lower, while some of the consumer stocks managed to advance.

Meanwhile, traders received a few economic reports this morning. Housing starts dipped to an annualized rate of 1.215 million units in the month of April. Analysts had been looking for a higher number. Meanwhile, building permits, which tend to be a forward looking indicator, picked up during the month. Elsewhere, industrial production rose 0.5% in March, which was in-line with the consensus view. Tomorrow will be a relatively quiet day for news. However, the Federal Reserve releases its latest Beige Book summation in the early afternoon.

The first-quarter corporate reporting season is now in progress. We recently heard from Goldman Sachs (GS - Free Goldman Sachs Stock Report). That stock was off in response to a disappointing report. Also, traders were not too pleased with the numbers from Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report), as that issue traded lower.

Technically, the stock market continues to trade in a choppy fashion. With price-to-earnings multiples somewhat extended, in our view, there is little room for disappointing news.   - Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


12:15 PM EDT - U.S. stocks were down across the board on Tuesday morning, with each of the three major indexes paring their gains from yesterday’s run by the bulls. Corporate earnings season and persistent tension on the geopolitical landscape are the two main forces pushing the market averages lower today. Though the latter has deescalated somewhat, as United States’ military action in North Korea seems increasingly unlikely, the proposal of a snap election by British Prime Minister Theresa May and uncertainty ahead of the French election are stoking some concerns. Both large- and small-cap equities were firmly in the red, while nine of the 10 market sectors are trading lower, on an aggregate basis, so far today.

The Dow Jones Industrial Average is the worst performing index, as a surprise earnings miss from banking component Goldman Sachs (GS - Free Goldman Sachs Stock Report) has dragged the grouping sharply lower. Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report) is also weighing on the index of 30 bellwether companies. The healthcare giant delivered solid profits, but a slowdown in pharmaceutical sales has weighed on its shares.  Tomorrow will see a number of financial companies releasing quarterly updates. The broader S&P 500 and tech-laden NASDAQ were both down this morning. Neither has fallen to the depths of the Dow, however, which was more-than 130 points lower as we crossed into the afternoon. In a stark reverse from Monday’s buying rally, declining shares are nearly doubling advancing issues.

Meanwhile, the business beat is probably influencing today’s trading too. A 0.5% rise in industrial production was in-line with expectations, buoyed especially by weather-related increase in utilities output. Beneath the headlining number, though, investors were ostensibly concerned with a significant fall off in factory production, the first monthly decline since August. Also contributing to the morning’s bearish trade was the nearly 7.0% decline in March housing starts. As reported by the Commerce Department, disappointment from the missed forecast was only slightly offset by the 3.6% increase in housing permits. And tomorrow, the Federal Reserve will release its Beige Book summation. The collection of anecdotal updates from each of its branches will help traders to better ascertain the recent strength of the economy.

So, with the bears’ grasp on trading holding strong, it is unlikely we see a sufficient rally to bring the major averages into positive territory for the day. In fact, each of the three main indexes fell near new day-long lows before noon. Looking out, some clarity on the Trump Administration’s tax reform and deregulation plans, as well as an encouraging contribution on the earnings front, would help to turn around the recent stagnation on the market.   - Robert Harrington

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


Before The Bell - The major U.S. equity indexes came roaring back after the long holiday weekend, putting an end to a three-session losing streak in a big way. Indeed, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index jumped 184, 52, and 20 points, respectively. The primary catalysts were some supportive earnings news from Corporate America, positive GDP data out of China, and some easing geopolitical concerns, at least for the moment. Investors took some comfort in commentary from President Trump's national security adviser, H.R. McMaster, who said last weekend that the United States, its allies, and China were working on an array of responses to North Korea's latest failed ballistic missile test. Mr. McMaster also indicated that the Trump Administration was not considering military action for now.

The week’s first trading session was never in doubt, as the major averages were higher at the get go and never looked backed, with the buying intensifying as the bullish session wore on. Market fundamentals were one-sided. There was a plurality of winning issues on both the New York Stock Exchange and the NASDAQ, with advancers leading decliners by nearly three to one on the Big Board. From a sector perspective, it was all up arrows among the 10 major equity groups, with the leadership coming from the recently out of favor technology and financial stocks. Overall, there were plenty of options for those looking to get back into the equity market after a three-day losing streak on Wall Street.

As noted above, one of the primary catalysts behind the buying spree was some supportive earnings news. And the investment community will get plenty of earnings new this week, as earnings roll in, highlighted by the latest quarterly results from nine Dow-30 companies. After yesterday’s closing bell, video streamlining service and original content producer Netflix (NFLX) reported earnings and this morning brought quarterly results from three of the aforementioned Dows: Goldman Sachs (GS - Free Goldman Sachs Stock Report), UnitedHealth Group (UNH - Free UnitedHealth Stock Report), and Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report). Of note, shares of Goldman Sachs are trading lower in pre-market action and are likely to erase more than 50 points from the Dow Jones Industrial Average at the start of the session. The investment bank's first-quarter results fell short of Wall Street estimates. Still, our sense is that the first-quarter earnings will prove fruitful for equities and somewhat justify the market’s rich valuation. The consensus is that earnings growth for the S&P 500 companies will be the best since the third quarter of 2014 and top the 10% growth mark. That said…

The investment community’s attention will not be confined to the corporate world, as we also will receive a number of important economic reports, including the latest data on industrial production, residential construction, and existing home sales. And tomorrow, the Federal Reserve will release its latest Beige Book summation of economic conditions. That report will probably provide some more clues as to how the central bank will proceed with regard to monetary policy. In addition to the recent geopolitical fears, the stock market has recently been held in check, at least until yesterday, by the belief that the Federal Reserve will begin to pare its bloated balance sheet, which expanded with the lead bank’s aggressive bond-buying program to pump money back into the economy in the years immediately following the Great Recession.

With less than an hour to go before the start of trading stateside, the equity futures are indicating a lower opening for U.S. stock market. As noted above, the Goldman Sachs news is likely to weigh on the Dow Jones Industrials early in the session. Overnight, the main indexes in Asia finished mixed, while the major European bourses are in negative territory as trading enters the second half of the session on the Continent, with notable losses for France’s CAC-40 and London’s FTSE 100. At least initially, it is looking like the bears will be trying to make a statement after yesterday’s encouraging start to the busy trading week. Stay tuned.   - William G. Ferguson 

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.