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After The Close - The U.S. stock market moved higher this morning, and managed to build on these early gains through the afternoon. At the close of the session, the Dow Jones Industrial Average was up 107 points; the broader S&P 500 Index was ahead 12 points; and the NASDAQ was higher by 37 points. Advancers outpaced decliners by a healthy margin on the NYSE, suggesting some broad-based buying. From a sector view, the healthcare and consumer issues displayed leadership today, while the energy and utility stocks were areas of weakness.

There were quite a few economic reports issued today. Specifically, the Consumer Price Index rose 0.6% during the month of January. This was a higher reading than had been anticipated, but probably not enough on its own, to suggest that inflation is becoming a problem. Furthermore, retail sales increased 0.4% in January, which was stronger than had expected. Finally, industrial production declined 0.3% in the latest month, which was somewhat disappointing. Tomorrow, we get the latest monthly housing starts, the weekly initial jobless claims, as well as a report on conditions in the greater Philadelphia region.

Meanwhile, traders continue to receive fourth-quarter profit reports. Over the past 24 hours we heard from a few leading names. It is worth mentioning that shares of PepsiCo (PEP) closed lower, even though the beverage maker delivered better-than-anticipated numbers. Things did not go too well for Fossil (FOSL), as shares of the watchmaker tumbled on concerns about the outlook. After the closing bell, Cisco Systems (CSCO Free Cisco Stock Report) and Applied Materials (AMAT) were slated to weigh in with their numbers.

Technically, stocks continue to move up, fueled by corporate profit reports and perhaps some optimism about the new Administration in Washington. - 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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11:45 AM EST - The U.S. equity market started the session in directionless fashion and with a slightly bearish undertone. It seemed to be a case of some initial profit taking after the major averages once again finished at record levels yesterday, rallying after a similar start to the one we saw today. And on point, much like yesterday, the major averages turned positive after comments from President Trump in a conference with the nation’s leading retailers reiterated that a massive tax-reform plan will be coming shortly. The continued talk of more business-friendly policies is once again pushing the market averages higher. The commentary from the White House is offsetting the hawkish testimony from Fed Chair Janet Yellen on Capitol Hill.

Near the noon hour on the East Coast, the major indexes, which started in the red, are now in positive territory and at session highs, led higher by the Dow Jones Industrial Average. Market breadth, which initially favored the bears, has turned nicely positive, with advancing issues leading decliners comfortably on the New York Stock Exchange and the NASDAQ. Likewise, we are seeing a number of issues hit new 52-week highs, led by the financial stocks.

There also is some notable sector rotation on Wall Street. A second day of testimony by Fed Chair Janet Yellen before Congress seems to be driving the sector rotation. Ms. Yellen commented during her testimony that the Fed is seeing what it needs to see with regard to employment and interest rates, as inflation is moving closer to the central bank’s target of 2%. That commentary has raised the odds for the possibility of as many as three monetary tightenings this year. The resultant higher bond yields is giving a boost to the financial group today. Conversely, the higher-yielding equities (i.e., utilities and telecommunications), which become less attractive to income-oriented investors when fixed-income rates are rising, are weaker today. Likewise, we are seeing weakness in the commodities categories, with the higher U.S. dollar weighing on the basic materials and energy groups.

The strength of the U.S. dollar is being fueled by a trio of encouraging reports on the U.S. economy earlier today. Before the market opened stateside, we learned consumer prices increased by the largest amount in four years in January; the U.S. retailers also reported strong sales last month; and, although industrial production decreased 0.3% in January following a 0.6% increase in December, manufacturing output moved up 0.2%. Likewise, manufacturing conditions in the New York area jumped to its highest level in more than two years in February. The strong economic data raised sentiment that the central bank may well tighten the monetary reins at its March FOMC meeting, a scenario raised by Ms. Yellen’s commentary the last two days.

Looking ahead to the second half of today’s session there looks to be little to slow the continued Trump rally on Wall Street, not even some hawkish speak from the Federal Reserve. The Dow Jones is on its best run this year and the broader S&P 500 Index is witnessing its best stretch in three years. Stay tuned. - William G. Ferguson

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

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Before The Bell - Following a solid rally to start the new week, yesterday's session began with the look of a profit taking day on Wall Street. True, the early losses were limited, with the Dow Jones Industrial Average largely dancing around the neutral line throughout the morning. But as we began the afternoon, the early losses dissipated and we were resuming the uptrend just after noon on the East Coast. The mid-course improvement, which came in spite of some hawkish comments from Federal Reserve Chair Janet Yellen, saw the Dow and the NASDAQ move into the plus column as the lunch hour proceeded.

The market then strengthened into the early afternoon, as Apple (AAPL - Free Apple Stock Report) pushed to just over $135 a share, a record high, on strong iPhone sales. However, the market was not as strong as the leading averages would suggest, for although the Dow (up 60 points), the S&P 500 Index (better by seven points), and the NASDAQ (ahead by 14 points) were evidencing solid improvement, there still were more declining stocks than advancing issues on the Big Board as we entered the final two hours of the session, while there was just an even divide between gaining and losing groups, with further notable slippage in the telecom and utility sectors.   

Regarding Ms. Yellen, she seemed to give the financial markets a wake up call, saying that the Federal Reserve still intends to raise interest rates three times this year. However, that would seem an aggressive timetable and intent, and we continue to think two to three times might be a more logical course given the slow start, as the January FOMC meeting saw the Fed pass on a rate hike and the guessing is that March will yield the same result. Still, bonds sold off on this indication in testimony before the Senate Banking Committee yesterday morning. But stocks did not wilt.

All told, the 10-year Treasury note's yield rose to near 2.50%, while the two-year note went as high as 1.25%. Of course, should the Fed not raise rates at its March and even April meeting, getting to three increase this year would mean some aggressive moves later in the year. As to the equity market's reaction, stocks bounced generally higher--at least the leading averages--after her comments. It seems that traders are comfortable with such a semi-aggressive monetary approach going forward, as they are clearly mollified at this time by promises of a more friendly tax structure. 

As the market ticked down toward the trading day's conclusion, the major large-cap averages held in solidly positive territory, while the smaller indexes also held in the black, albeit more gingerly so following losses earlier in the session. As before, there was a fairly even split between winning and losing groups, while losing issues continued to hold a nominal lead on the NYSE. Things changed rather little as we concluded the session, although there was a moderate move into further positive territory, overall. In all, the Dow added 92 points; the S&P 500 Index rose nine points; and the NASDAQ was ahead by 19 points.   

Looking out to the middle day of the week, we see that stocks traded in the plus column overnight in Asia, while in Europe, the major bourses are trending higher, as well. On our shores, meantime, the futures are suggesting a slightly higher open when trading resumes a little later this morning. Looking at the calendar of events, meanwhile, industrial production and factory utilization data are set for release later this morning, while tomorrow will see the issuance of results for January homebuilding.   - Harvey S. Katz 

At the time of this article’s writing, the author held positions in one or more of the companies mentioned.