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After The Close - Stocks closed the week on an upbeat note, supported by favorable news on earnings and the economy. At the close, the Dow Jones Industrial Average was up 67 points; the NASDAQ gained 11 points; and the S&P 500 tacked on five points. For good measure, the small-cap Russell 2000 rose seven points. Market breadth attested to the favorable sentiment, with gainers moderately outnumbering declining issues on both the New York Stock Exchange and the NASDAQ.

The backdrop was helped out early on by a July jobs report issued by the Labor Department that topped expectations in terms of positions added and wage growth. The data firmed up the thinking that the Federal Reserve will again raise interest rates this year, but was not so strong as to rattle investors or change Fed policy notably.

More to the point, the trend of strong corporate profits contributing to the latest leg of the market’s rally continued in the latest session. Stocks that performed exceptionally well included Yelp (YELP), which connects customers to local businesses on line. Yelp posted a surprise profit.  Shares of Weight Watchers (WTW) also jumped after a report showing strong underlying business. The diet systems company noted a 20% gain in subscribership.

On the down side, generic drug manufacturer Teva Pharmaceutical (TEVA) turned in weak results. Increased competition and poor pricing trends are hurting the company, and Wall Street took notice. Its American Depository Receipts fell notably as a result.

Meanwhile, one broader theme helping the market, weakness in the international value of the dollar, took a breather today as the greenback climbed a bit in value. Even so, the dollar’s fall in 2017 is generally a plus for multinational corporations, since it makes their products and services more affordable to overseas customers. A 7% year-to-date drop in the dollar, as measured by a prominent index, has proven supportive of stocks.
Of further help in recent days has been a climb in oil prices. The U.S. benchmark grade pushed toward retaking the $50-a-barrel level in NYMEX trading today, on more signs that a drawdown of bloated inventories is accelerating.  The international crude oil marker is already above $50 a barrel.

Overall, most sectors were lifted by today market action, with the exception of healthcare, where we noted some weakness, and the interest-rate sensitive utilities sector.
For the week, the Dow Jones Industrials rose 1.1%. - Robert Mitkowski

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

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12:10 PM EDT - The U.S. stock market is trading modestly higher today, as traders sift through the latest batch of corporate profit reports and digest a key economic news item. At just past noon in New York, the Dow Jones Industrial Average is ahead about 34 points; the broader S&P 500 Index is up four points; and the NASDAQ is better by 14 points. Market breadth shows a slightly positive bias to today’s session, as advancing issues are just ahead of decliners on the NYSE. Among the major equity groups, leadership can be seen in the financials, energy, and basic materials issues. Weakness can be found in the healthcare and utility names.

Meanwhile, as noted, traders received a major economic report this morning. Specifically, nonfarm payrolls increased by 209,000 for the month of July, which was a stronger reading than had been anticipated. The headline employment rate dipped to 4.3% for the month, coming in as expected. Given the fact that the economic recovery has been in place for several years, and the Federal Reserve has already started to adjust its monetary policy, most traders were probably pleased to see that the nation’s job market continues to improve.

Meanwhile, the second-quarter earnings season is ongoing. Over the past 24 hours, we heard from a number of companies. Among the big names, shares of Consolidated Edison (ED) are down slightly, as investors were not overly impressed with the utility operator’s report. Among the small and mid-sized companies, shares of Weight Watchers (WTW) stock is soaring, after the company posted a solid set of second quarter numbers, and provided an upbeat outlook. 

Technically, stocks continue to edge higher, helped by the relatively strong corporate reporting season. While many of the larger companies have already weighed in with their numbers, we will now start to hear from the smaller, and often more dynamic, names. - Adam Rosner

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

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Before The Bell - Following the first ever close above 22,000 by the 30-stock Dow Jones Industrial Average on Wednesday, that key composite began yesterday's session with slight losses in some selective profit taking. Interestingly, two of the early casualties yesterday were among the better Dow performers recently, namely Apple Inc. (AAPL - Free Apple Stock Report) and Boeing (BA - Free Boeing Stock Report), although the latter did rebound later in the day. But the selling was contained, and as the first hour ended, the Dow was back in the black, if grudgingly. Still, the more broadly based S&P 500 Index and the NASDAQ remained a bit lower, as did the S&P Mid-Cap 400 and the small-cap Russell 2000.

As per recent sessions, the chief influences were second-quarter earnings. And as before, the profit tide was strong and supportive, although there were some outliers among the companies issuing their releases, including MetLife, Inc. (MET), the giant insurer. That stock fell back some 3% after posting results on Wednesday. Overall, though, the reporting season has been a good one, with some three-quarters of the companies in the S&P 500 exceeding their bottom-line consensus views. That is helping to counter the choppy economic news we have been seeing on occasion.      

On this count, the Institute for Supply Management reported that its non-manufacturing survey had slowed down in July, registering a well-below consensus expansion rate of 53.9. Expectations had been for a tally of 57.0. In June, this survey had come in at 57.4. Breaking this report down, we see that July's results were headlined by slower rates of growth in new orders, employment, supplier deliveries, backlogs, and exports. One category, pricing, rose strongly in July, however, as it had in the companion manufacturing survey released on Tuesday. 

Still, this report, disappointing as it was, didn't shake Wall Street, as the initial pause in the Dow's rally was brief. So, as we moved into late morning, that composite strengthened a bit further, although the other indexes remained under water. As we moved into the first part of the afternoon, the market steadied, but the Dow again started to move in and out of the black. The other indexes retained their losses, as selective profit taking persisted. As before, most of the 10 leading equity sectors were lower, but just marginally so, while losing issues held a modest lead over gaining stocks on both the Big Board and the NASDAQ. 

Things changed little as we moved into and through the latter stages of the afternoon, as most investors' eyes were focused on the just-released Labor Department report on non-farm payrolls and the unemployment rate (see below). That posting can be a game changer if there is a major departure from expectations. That said, the Dow did firm somewhat for a time, before weakening again into the close. So, when the final tallies were in, we saw that this index had set another record high, while rising a modest 10 points on the day. Losses were spread across the other large and small composites, however. 

As to the employment report, the Labor Department has reported that the nation had added 209,000 positions in July; expectations had been for a gain of 180,000. At the same time, the unemployment rate came in at 4.3%; the consensus had been for a 4.3% rate. In June, the jobless rate had been 4.4%. This ties the low rate since the recession in 2007-2009. Also, job gains for May were reduced from 152,000 to 145,000; for June, though, they were revised up from 222,000 to 231,000. Importantly, and the best feature of this report was the fact that average hourly wages rose by nine cents, or above expectations in July.

This report, while better than forecast, still wasn't strong enough, with a labor-force participation rate of 62.9%, to push the Federal Reserve to be more aggressive in raising interest rates. At most, we see just one additional interest rate increase this year, with that uptick unlikely to come before December. As for the stock market reaction, the U.S. equity futures, up modestly before the report was released, strengthened a little further in the moments following the issuance. Treasuries, though, weakened, with yields rising somewhat on the better-than-expected data.  

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