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After The Close - U.S. stocks began Wednesday with a broad-based rally, before statements made by President-elect Trump pulled averages lower for a time. His anticipated policies, ranging from a reduction of corporate tax obligations to the doing away of a swath of regulatory measures, have driven the market to historic highs in recent months. Today’s remarks added some clarity, but also led to a several-hour streak of volatility that the bulls struggled to shake until the final few hours of trading.

Mr. Trump’s press conference, the first since before he won the office in early November, led to steep declines in the healthcare and aerospace sectors. In the former, the President-elect identified several problems with the competitive status quo. Accordingly, the healthcare category lost more than a full percent of its aggregate value. As for the latter group, Mr. Trump says he intends to implement a more open bidding environment for government contracts, particularly the F-35. This effort to prevent the cost overruns seen in many other big-ticket military projects, which have caused much handwringing and calls for reform from members of Congress, was celebrated by many of his constituents. But, investors soured on defense contractors, like Lockheed Martin (LMT), Northrop Grumman (NOC), and Raytheon (RTN), each of which shed value on the day.

Elsewhere, the typically Trump-friendly sectors, where his proposed policies have spurred stock values historically high in the past two months, performed well today. Basic materials trailed only the energy sector as the biggest gainer of the ten major groups, while industrials and utilities also performed well. The afternoon rally was bolstered by a push from the small- and mid-cap groupings, as was the positive market breadth for the day. Advancing issues outnumbered declining shares by a 1.6-to-1 ratio.

Meanwhile, oil prices rose on news that the Saudi Arabian government was cutting supplies in accordance with the OPEC accord. The major producer told several customers in Asia that it would decrease output in February, offsetting some concerns emanating in recent days from Libya, Iran, and elsewhere.  A weaker dollar, which fell sharply after Mr. Trump’s comments, was also a primary factor in the gains. Both of these developments were more than enough to mute the negativity stemming from a higher-than-expected crude stockpile in the U.S.  At the closing bell, U.S. crude per-barrel ticked nearly 3% higher, settling at $52.25.

While the last few hours of the day saw the bulls reclaim control of trading, investors were ultimately reluctant to drive averages higher than their morning peaks. The S&P 500 rose 0.28% from yesterday’s level, while the tech-laden NASDAQ posted a 12-point gain by the close. The Dow Jones Industrial Average failed once more to attain the elusive 20,000-point target, but finished the day about 55 points shy of the milestone. – 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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12:30 PM EST - The U.S. equity averages started the day on a generally mixed to positive note, with notable strength in the Dow Jones Industrial Average. But on a busy day on the political landscape, with Cabinet confirmation hearings on Capitol Hill and a press conference from President-elect Trump in New York City, the pace of trading picked up as the morning progressed, as did volatility. To wit, the political commentary has produced some big swings in trading today. Helping the market initially—the Dow Jones Industrial Average had been up triple digits intra-day trading—was a joint statement from the offices of Senate majority leader Mitch McConnell and Senate minority leader Charles Schumer that several of President-elect Trump’s Cabinet nominees will be approved on Inauguration Day next Friday. The prevailing thought is that these individuals will push for implementation of the incoming president’s pro-business initiatives, including corporate tax cuts and regulation rollbacks. The political news from Washington continues to dominate the newswires, as data on earnings and the business beat are light.

Meanwhile, at 11:00 A.M. (EST), the market changed direction swiftly during a news conference by President-elect Trump, the first by the incoming President since before the election was held on November 8th.  During the conference, the President-elect targeted the pharmaceutical and aerospace industries. All of the major averages fell on his commentary, with the healthcare stocks—the biotech and pharmaceutical names—dropping sharply on the drug pricing remarks.  President-elect Trump also called for more competition in the aerospace industry, which hurt the stocks of some of that industry’s leaders. Of note, Lockheed Martin (LMT) fell on the prepared remarks by the President elect.

From a sector perspective, there have been no standout performers among the 10 major equity groups. On the positive side, there is some buying in the energy sector. The energy stocks, in particular, are getting a boost from an increase in crude oil prices in both New York dealings and on the Continent. The rise in crude quotations comes on a day when former Exxon Mobil CEO and President-elect Trump’s selection for Secretary of State Rex Tillerson is appearing before Senate leaders on Capitol Hill in a confirmation hearing and the weekly petroleum status report showed a build in oil and gasoline inventories. Specifically, U.S. crude oil refinery inputs averaged 17.1 million barrels per day during the week ending January 6, 2017, 418,000 barrels per day more than the previous week’s average. Gasoline production increased last week, averaging about 9.7 million barrels per day. Meantime, the healthcare group for the reasons cited above is the biggest laggard today, while we are seeing some in modest selling in the financial and healthcare categories.

The incoming President’s commentary clearly produce a spike in volatility in the market this morning, with notable swings in the broader market. Our sense is that the remainder of the session will be a seesaw ride for investors, given the significant amount of political commentary coming from both Washington D.C. and New York City. The market, after the sharp change of direction, has since recovered with major averages regrouping as we move into the second half, led once more by the Dow, which is again up by some 80 points. Stay tuned. - William G. Ferguson

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 failed attempt to reach and surpass 20,000 on the Dow Jones Industrial Average. To be sure, the Dow did come within less than a point on Friday of that elusive target. But after that nominal shortfall, the blue chip composite was unable to reach that level on either Monday or yesterday, with both sessions wilting near the close of trading.

As to the latest session, the stock market started off poorly, with the Dow falling some 50 points early in the day, before turning around nicely late in the morning. In all, that composite climbed by some 70 points at mid-session, coming to within 45 points of 20,000. But this index soon began backtracking, along with the S&P 500 Index. However, the NASDAQ held on, advancing nicely once again, recording yet another record high in the process. 

This back and forth continued into the afternoon, with the Dow again backing off, regrouping, and then fading once more into the close. But unlike Monday, yesterday's market had an overall positive bias to it. On point, save for the Dow and the S&P 500 Index, which ended lower and flat, respectively, the market had an overall positive tone to it in the latest session.

Accordingly, seven of the 10 leading groups ended higher on the day, with just the consumer noncyclical stocks, the energy sector, and the interest-sensitive utilities ending the day lower. Six other groups rose modestly, while the basic materials category broke decisively to the upside, surging by more than 2%, with copper mining provider Freeport McMoRan (FCX) soaring some six percent at the close. 

Further breaking the market down, we see that gaining stocks held about a nine to five lead on declining issues on the Big Board, a ratio that was near the day's best, even as some of the indexes backtracked late in the session. Additionally underscoring the market's strong aggregate tone were gains of 11 points and 13 points, respectively, in the S&P Mid-Cap 400 and the small-cap Russell 2000. 

Looking ahead to the day at hand, President-elect Donald Trump will hold a news conference later this morning, perhaps shedding some light on economic policy going forward. The market seems excited about the presumptive lowering of tax rates. The market's strong rally since November 8th is based in large part on expectations of a more business friendly atmosphere coming out of Washington.

Meanwhile, glancing abroad at the markets worldwide, we find that stocks in Asia were mostly higher overnight, while they are up somewhat in Europe so far this morning and ahead of Donald Trump's press conference. In other markets, oil is ahead slightly; bond yields are little changed, and metals prices are mixed, as well, although gold did rise to a six-week high. As to our markets, as Wall Street awaits the pending tide of earnings reports for the fourth quarter and Mr. Trump's conference, the early read is modestly positive.   - Harvey S. Katz

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