After The Close - The major U.S. stock indexes started today’s session on a solid note, and the uptrend was maintained throughout the morning. However, mid-afternoon profit taking caused the indexes to give back most of those gains.
The news was light on the economic front today, so the market was largely driven by developments on the trade front. Specifically, recent comments from President Trump suggested that the U.S. and China would likely come to terms, allaying fears of an escalating trade dispute between the two superpowers. Investors will be listening closely when China’s President Xi Jinping speaks tomorrow at the Boao Forum, in hopes of further assurance that the rhetoric that has roiled the markets in recent weeks may finally be settling down.
At the closing bell, the 30-stock Dow Jones Industrial Average held a gain of 46 points and the broader S&P 500 closed ahead by eight. The tech-heavy NASDAQ came out on top, gaining 35 points or just over half a percent. All of the 10 major market sectors were in the green today, led by healthcare (up 1.3%) and technology (up 1.1%). At the other end of the spectrum, consumer cyclicals, and telecommunications were up fractionally.
Elsewhere, oil prices made a big move up, with light sweet crude advancing just over 2%, to $63.30 per barrel. Meanwhile, trading was less upbeat on the European bourses today, but still on the positive side, with the U.K. FTSE 100, Germany’s DAX, and France’s CAC-40 all up modestly for the session. – Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before The Bell - Much like the weather that has blanketed the Northeast region of the United States during the first week of April, trading on Wall Street has been rather dreary and frigid. The investment community’s attention, devoid of any major earnings news, has focused on the escalating trade war between the United States and China, which has seen the Trump Administration place a number of major tariffs on goods from China and Beijing respond with a series of their own on American-made goods entering the Asian nation. The fear among pundits and investors is that trade conflicts between the world’s two largest economies will have a detrimental effect on the health of the global economy and, ultimately, financial markets around the globe.
On Friday, a day that would normally be dominated by the latest data on the U.S. job market, investors were once again clearly unnerved by deteriorating trade relations between the aforementioned two economic powerhouses. Last week, China’s government pledged to counterattack if the Trump Administration follows through on threats to impose tariffs on an additional $100 billion in Chinese goods. On Friday, President Trump sent mixed signals about whether he will want to negotiate new trade deals with China, and that clearly spooked investors. Not surprisingly, the major equity indexes were under heavy selling pressure, with the Dow Jones Industrial Average, the NASDAQ, and broader S&P 500 Index positing respective declines of 572, 161, and 58 points.
The selling was broadbased on the final day of last week, with declining issues outnumbering advancers by more than 3.5 to one on both the New York Stock Exchange and the NASDAQ. Among the 10 major equity groups, the selling was heaviest in the economically sensitive sectors, with the biggest laggards being the industrial, financial, basic materials, technology, and healthcare groups. All of the 10 major groups finished in the red, but we did see some selective rotation into the more-defensive utilities, consumer staples, and telecom categories. There was clearly a “flight-to-safety” strategy on display last week.
As noted above, there was some major news from the business beat on Friday. Specifically, the government reported that nonfarm payrolls, which had been expected to increase by 173,000 in March, came in with an advance of just 103,000. And the jobless rate, expected to dip from 4.1% to 4.0%, held at 4.1%. In other aspects of the report, the government noted that average hourly earnings increased by eight cents for the latest month and by 2.7% for the past 12 months. Meantime, January payrolls were revised downward from an increase of 239,000 to one of 176,000. However, the February tally was revised higher, rising from 313,000 to 326,000. Also, the labor-force participation rate eased to 62.9% in March, from 63.0% in February. Overall, it was not a good reading on the labor market, but it did take a backseat with investors to the trade war between the U.S. and China. This week, the news on the economy will be on the light side, but the reports, including the latest data on producer (wholesale) and consumer prices, as well as the minutes from the last FOMC minutes (released at 2:00 PM EDT on Wednesday), may bring the talk of inflation back into focus, which has led to some volatility in the market this year. Investors should note that several Fed District Presidents also are scheduled to speak this week, with the commentary likely to be closely followed by market participants.
Meantime, this week marks the official start of first-quarter earnings season, with a few of the nation’s prominent banks scheduled to release results toward the end of the five-day stretch. The headline quarterly report will come on Friday morning when Dow-30 component and banking behemoth JPMorgan Chase (JPM – Free JPMorgan Stock Report) reports earnings before the market opens. The earnings season, which does not kick into high gear until next week, is expected to be a good one for Corporate America and one that Wall Street hopes will provide some much needed support for the slumping U.S. stock market.
With less than a half hour to go before the commencement of the new trading week stateside, the equity futures are indicating some bargain hunting in the U.S. stock market. So far overseas, the main indexes in Asia were higher overnight, while the major European bourses are most in the red, but none too far removed from the neutral line, as trading moves into the second half of the session on the Continent. Stay tuned. - William G. Ferguson