After The Close - Equities opened higher and continued to press ahead through the afternoon, with just slight weakening into the close. At the end of the session, the Dow Jones Industrial Average was ahead 174 points; the broader S&P 500 Index was up 18 points; and the NASDAQ was higher by 54 points. Most stocks made progress, as winners easily outpaced losers on the NYSE. In addition, most of the major stock groups managed to advance, with leadership in the financial and basic materials issues. However, the high-yielding utility stocks did not participate in today’s move up, instead headed lower. Of note, traders may have been feeling less risk averse today, and more willing to move capital into more dynamic parts of the market.
Meanwhile, today’s economic news was not particularly inspiring. Specifically, initial jobless claims moved higher to 244,000 for the week of April, 15th. However, this figure was in line with analyst expectations. Elsewhere, the Philadelphia Fed’s report of business conditions in the greater Philadelphia region came in at 22.0 in April, which was quite a bit lower than the March figure. Finally, on a brighter note, the Conference Board’s report of leading indicators showed a 0.4% increase in March, which was encouraging. Tomorrow will be a relatively quiet day, with only the latest monthly existing home sales figures due out.
Elsewhere, the first-quarter corporate reporting season is now in progress. On point, we heard from American Express (AXP – Free American Express Stock Report) after the close yesterday. That issue traded nicely higher today, in response to the encouraging report. However, traders were not enthusiastic about the latest issuance from Verizon (VZ – Free Verizon Stock Report) as that issue lost some ground.
Technically, the stock market has yet to fully recover after pulling back in early March. Traders seem to be looking for direction, and may gain some clarity as many corporations weigh in with their results in the coming weeks. Further, investors continue to look for signs that progress will be made in Washington. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
11:20 AM EDT - Following a very strong start to the trading week, in which all of the major averages soared on Monday, and a pair of subsequent uneven performances on Tuesday and Wednesday, as generally stronger earnings across Corporate America were countered by a few high-profile misses on companies within the 30-stock Dow Jones Industrial Average, stocks began today's session modestly to the upside. A decent report on initial and continuing jobless claims and further supportive bottom-line results got the day off nicely, and seemed to get the market set up for a strong latter half of the week.
As noted, most early profit reports have been reassuring. In the latest batch of companies issuing their metrics since late yesterday afternoon, including Dow component and financial services giant American Express (AXP – Free American Express Stock Report), the results have been similarly supportive on the whole. On point, much of the Dow's early advance, which was approaching 80 points at mid-morning, was being furthered by a nearly 4% jump in AXP shares. Not all of the news was good, however, as fellow Dow component Verizon (VZ – Free Verizon Stock Report) missed on both the top and bottom lines, and that stock was faltering a bit.
Regarding the economy, following the benign jobless claims data, the Conference Board issued its Leading Economic Index figures at 10:00 AM (EDT), in which that predictor of upcoming economic activity saw an increase of 0.4% in March. That series result followed a 0.5% uptick recorded in February. Two offshoots of that series, the Coincident Economic Index saw a 0.25 advance, while lagging Economic Index was unchanged for the latest month. Overall, though, the market's generally stronger performance today reflects its satisfaction with the tenor of the latest earnings reports.
The market then maintained and even increased its mid-morning gains as the session moved further along. And the advance was broad based, with eight of the 10 leading equity groups on the plus side of the ledger, while gaining stocks were about twice the number of losing issues. Among the major groups, meantime, higher oil prices are giving a boost to the energy groups, while indications the President will investigate the steel import problem are giving a lift to the metals issues, including U.S. Steel (X), which is up by almost 4% so far today. All in all, there is a strong session shaping up.
Accordingly, as the noon hour nears, and notwithstanding continuing angst ahead of France's contentious election, where far right and far left parties are vigorously contesting for the Presidency of that Republic, the Dow is ahead some 80 points; the S&P 500 is better by seven points; and the NASDAQ is up some 25 points. Moderate gains also are being posted by the small- and mid-cap indexes in a session that seems likely to favor the bulls throughout. Stay tuned. - Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before The Bell - After a strong gain for the stock market to open the week on Monday, as the Dow Jones Industrial Average jumped by over 180 points, and some backtracking on Tuesday, as the Dow gave back two-thirds of that earlier advance, principally on weakness in Goldman Sachs (GS - Free Goldman Sachs Stock Report) and Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report). Wall Street began the middle trading day of the week on an uneven note, with gains in the Standard and Poor's 500 index and the NASDAQ, but further slippage in the Dow, this time on a selloff in IBM (IBM - Free IBM Stock Report) on a disappointing revenue and profit report.
The market then continued on this irregular path throughout the morning. All told, however, there was a generally positive tone to the session, with gaining stocks easily surpassing declining issues on the Big Board, while more of the 10 leading equity sectors were gaining in price than declining. And even the Dow, off modestly for much of the morning, was lower than solely because of IBM, which was down some 6%, or nearly $10 a share. But the day was also notable for strength on the technology side, which would explain the formidable gain on the NASDAQ.
At the same time, the damage to the equity market was limited by strength in the financial services group, as shares of Morgan Stanley (MS) did well on a news of a profit beat, just one day after the disappointing results at rival Goldman Sachs. Overall, earnings season has been a good one so far, but with some notable high-profile misses. Also on the minds of investors is the international outlook, where a looming Presidential election in France holds drama, as does an upcoming vote in Great Britain, with the latter event set for June.
The stock market continued to then mark time, and reached the noon hour in New York, with the Dow off some 35 points on the sharp IBM decline, but strength elsewhere, particularly in the S&P Mid-Cap 400 and the small-cap Russell 2000. Meanwhile, there was concern ahead of the 2:00 PM (EDT) release of the Federal Reserve's Beige Book. But once that economic report came out, and there were no surprises of note, the market was able to avoid any further downdraft in the minutes following that issuance.
As to the Fed, our sense continues to be that it will resume raising interest rates in June and then lift them again, but modestly, later in the year. Even so, stocks drifted over the final two hours, with the weakness increasing as the day wore on, as the Dow fell to a triple-digit loss, principally, but not reclusively, on that IBM miss. Also, the S&P 500 fell into minus territory, while the NASDAQ and the smaller indexes still held onto gains. What turned the market lower was not earnings nor the Beige Book, but oil, which fell some 4% in price in late afternoon.
The selloff in oil evolved after U.S. data showed a smaller-than-expected decline in crude inventories along with another rise in oil production. In all, the latest drop in oil produced the biggest one-day decline since March, with crude backing off to just over $50 a barrel in late New York dealings. The market's selective selloff then continued into the close, with the Dow finally ending with a near session-worst setback of 119 points. The S&P 500 Index (off four points) the other casualty, while the NASDAQ, the S&P 400, and the Russell 2000 also wound up with gains, but notably smaller ones than earlier in the session.
Looking out to a new day now, we see that the markets in Asia were slightly higher overnight, while on the Continent, Europe's bourses are now largely treading water ahead of the start on our shores. As to our markets on this earnings heavy day upcoming, oil is up a few pennies following yesterday's sharp retreat; U.S. Treasury yields are climbing a bit; and our stock market is showing some modest strength ahead of the opening bell. As to economic news, the leading indicators will be out at 10:00 AM (EDT) this morning. A modest increase of 0.3% is the expectation. - Harvey S. Katz