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After The Close - Equities retreated earlier today, but managed to recover some ground in the afternoon. At the close of trading, the Dow Jones Industrial Average was up eight points, while the broader S&P 500 Index was off two points, and the NASDAQ was lower by five points. Market breadth was still negative, as losers were ahead of winners on the NYSE. From sector perspective, the energy and consumer names were areas of weakness, while the utilities and technology names managed to display a degree of strength.

Traders received a number of economic reports today. Specifically, housing starts came in at an annualized rate of 1.24 million units in the month of January. Building permits, which are seen as a leading indicator, also moved up during the month. On the employment front, initial jobless claims came in at 239,000 for the week of February 11th, which was a better showing than had been expected. Finally, according the Philadelphia Fed, business conditions improved in the greater Philadelphia region during the month of February.

Meanwhile, the fourth-quarter profit season continues. Over the past 24 hours we heard from a number of widely-held names. For example, shares of Cisco Systems (CSCO Free Cisco Stock Report) moved up, after the networking company posted a respectable report. Meanwhile, shares of Waste Management (WM) turned lower, even though the trash hauler delivered top-and-bottom line numbers that more or less met expectations.

Technically, stocks continue to exhibit considerable resilience. Of note, after weakening in the morning, today, buyers quickly moved in to support the market. – 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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12:00 PM EST - The major U.S. indexes exhibited up-and-down movement on Thursday morning, beginning the day by setting record highs – a growingly regular occurrence in this bullish market – before spending most of the opening hours in the red. The S&P 500 and NASDAQ have been the most challenged, shedding as much as 10 and 21 points at their respective nadirs. The Dow Jones Industrial Average’s financial and healthcare constituents are under particular pressure today, dragging the aggregate average into negative territory during the latter half of the morning. The roughly 2-to-1 lead held by declining issues can be attributed to the downward movement of small-cap equities.

With valuations consistently higher in the past week, we believe rotational trading and profit taking were the primary causes of the morning dip. Still, there have been some positives in today’s market. On point, Dow components Cisco (CSCOFree Cisco Stock Report) and Coca-Cola (KOFree Coca-Cola Stock Report) are helping to offset losses from their aforementioned compatriots. Meanwhile, the technology and utilities sectors have managed decent advances this morning.

And, despite the morning’s correction, we believe the months-long rally stoked by optimism for President Trump’s business-friendly legislation remains intact. Hopes that a deregulated banking sector, ramped up infrastructure spending, and an overhauled corporate tax code will drive economic growth continue to outweigh political concerns elsewhere on The Hill. But investors will eventually desire more clarity on many of the Administration’s plans for reform in the coming weeks and months, which could spell for more sustained corrections to the elevated valuations.

Meanwhile, mixed news items on the energy front sent domestic oil prices lower. Though reports that OPEC and other exporters were looking into extending and increasing their drilling cap sent per-barrel prices higher early, stateside developments negated these gains shortly thereafter. With historically high crude and gasoline inventories in the U.S., demand has accordingly softened. This duo of factors, OPEC and U.S. stockpiles and production, are likely to remain the dominant forces in the energy market for the foreseeable future.

So, with a day and a half of trading left in the week, it would take a substantial effort on the part of the bears to offset the gains registered in earlier sessions. In fact, as the noon hour approached in New York, the losses on the key indexes continued to narrow. Stay tuned. - Robert Harrington

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 - Another day, another melt up for a richly valued stock market. On point, after solid advances on Monday and Tuesday of this week, Wall Street started the session yesterday with a mild retreat. That early dip, perhaps, reflected the issuance of inflationary consumer price data about an hour before the stock market opened. Specifically, the CPI jumped 0.6% in January, twice the expected 0.3% rate of increase. Such an uptick could mean that an upward adjustment in the federal funds rate, earlier believed to be off the table for March, could be back on again, although such an early hike is still an unlikely outcome, in our view.

However, the inflation disappointment was offset to a degree by a better-than-expected 0.4% rise in retail sales for last month (that report was released at the same time). Taken together, such data did not prove damaging to sentiment, so even with a suddenly more hawkish Federal Reserve Chair Janet Yellen talking to Congress for a second day running, the early slight reversal came to an end very quickly and stocks were soon back on the rise. The climb to yet additional all-time highs came about as investors again took note of President Trump's economic agenda--including the promise that a major tax cut is upcoming.

The stock market appears to take on added life whenever it seems as though we are getting close to a policy announcement--this time having to do with taxes. As long as the Street stays focused on growth and looks away from the threat of higher inflation, however premature that shift might be, the market should continue to press ahead. Also encouraging to the bulls is the fact that the market seems able to shrug off the other doings in Washington. Meantime, stocks were not the only asset class rising; so, too, were bond yields, as the rise in inflation lifted the return on the 10-year Treasury note to more than 2.50%.          

As to U.S. equities, they resumed their unrelenting rise shortly after the opening bell, and by mid-session, the Dow Jones Industrial Average was ahead by just over 100 points, climbing past 20,600 in the process. The Dow, which had been sitting at near 18,000 at the time of the election, has been on a tear since that time, as have the S&P 500 Index and the NASDAQ. The small-cap indexes likewise have been surging. As to Ms. Yellen, she maintained that it would be "unwise" for the central bank to wait too long to raise interest rates. Of course, such musings do not assure a March rate hike, as the Fed often backtracks.  

Meanwhile, after that early spike upward, the market drifted at comfortably higher levels through the afternoon, with the Dow moving above and below 20,600 as the day wound down. Most of the 10 sectors were higher, with the consumer noncyclical and health care groups in the lead. The higher-yielding utilities were again bringing up the rear, as gaining stocks were comfortably ahead of losing issues on the Big Board. It was another solid showing by the emboldened bulls. Now, the Administration will need to deliver, we believe, to keep the momentum going a while longer. 

All told, at the close, the Dow had pushed up by 107 points to close just above 20,600; the S&P 500 Index was better by 12 points; and the NASDAQ was in the black by 37 points. Modest gains also were secured by the Russell 2000 and the S&P Mid-Cap 400. In all, the post-election market surges carries on. In fact, just when it looks as though the market is fatigued, the bulls get another wind, and stock press forward aggressively. Clearly, there are high hopes for higher economic growth and lower taxes. Now, the new Administration will need to deliver.

Looking ahead, there seem to be few doubts overseas, as stocks were mixed in Asia overnight, with Japan's Nikkei the main casualty, while in Europe, the principal bourses are a little weaker. Oil, meantime, is up a few cents a barrel, while our futures are thus far pointing to an opening that is little changed.   - Harvey S. Katz 

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