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After The Close - The U.S. stock market continued its rally on Wednesday, with each of the large-cap indicators setting intraday records throughout. The run up was buoyed by a slew of favorable updates on the business beat. Construction spending beat estimates in November, while the Institute for Supply Management’s manufacturing index expanded at a better-than-expected rate in December.

Of all the indexes, the Dow exhibited some intermittent, and ultimately inconsequential, selling pressure. Intel Corp.’s (INTCFree Intel Corp. Stock Report) struggles held back wider gains at times, but the blue chip index rallied mightily to set another high in the final thirty minutes of the session. The broad-based S&P 500 and tech-laden NASDAQ also surged to new peaks as the closing bell neared. Even the Russell 2000 added value in the final hour after spending most of the middle part of the day hovering between positive and negative territory.

The market sectors reveal a similarly positive undertone. Energy, healthcare, and technology were the best performing groupings, with utilities and telecom equities lagging. The day’s rally was mostly restricted to large and mid-cap shares; however, advancing issues managed to build a three-to-two lead over declining stocks.

Moreover, the bullish session occurred in spite of ostensibly heightened tensions with North Korea. In our view, it appears the market has adapted a tolerance for some of the ceaseless stream of headline-grabbing developments from the Hill over the past year-plus.

Meanwhile, after rising above $60 a barrel on Tuesday, U.S. crude oil reached its highest valuation since mid-2015. The nearly 2% advance was supported by the strong U.S. economic data and an expectation that unrest in Iran will support buying activity. This tailwind more than negated concerns about overproduction from Russia.

Looking forward, the recently reinvigorated equity market will likely see some challenges as earnings season approaches in February. Also likely to be of focus in 2018 are the Trump Administration’s plans for an infrastructure overhaul, wage growth, and November’s midterm elections, among many other factors. For now though, the bulls have a tight grip on trading. Stay tuned. – Robert Harrington

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

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Before The Bell - Wall Street, fresh off a year of big gains, started 2018 in upbeat fashion, as well. Indeed, within minutes of the morning bell, the 30-stock Dow Jones Industrial Average, a 25% gainer in 2017, was up more than 140 points. The NASDAQ, too, catapulted higher, rising 90 points, or more than a full percentage point. It seemed that the Street was banking on another big year for equities, as the bull market, which is now nearly nine years old, and has seen the Dow nearly quadruple in value, seems alive and well, as we begin another 12-month campaign. However, at least for the Dow, that early leap forward would prove the high water mark for the session.

Meantime, the bulls cheered the early gains, as a strong start to a new year--especially if it continues for the first five days--often is seen as a telling sign. As to the market, it got a boost last year from rising earnings, a resilient economy, and the long-anticipated passage of a tax overhaul. In fact, when it looked late in the year as if Congressional Republicans would be successful in getting the major tax code changes enacted, especially on the corporate side, the stock market rolled into especially high gear, concluding the 12 months within shouting distance of all-time highs.

The initial equity gains, meanwhile, were broad-based, with advancing issues overwhelming decliners by a count of almost five to two. Big early gains were secured by the basic materials group, the consumer cyclical stocks, the energy components, health care, and technology. However, this promising start did not continue in the blue chips, and as we neared the noon hour in New York, the Dow had lost more than  100 points of that fast start. But the NASDAQ, boosted by solid gains in some high-profile components, managed to hold onto much of its early surge, retaining over 80 points of that early charge.      

The market then steadied itself as the afternoon got under way, with the Dow starting to regain some momentum, moving back up to a gain of some 50-70 points for the next two hours, or so. The NASDAQ, meantime, held fast to its best levels of the session, rising by some 90 points on strength in a wide range of technology issues. As before, gain in stocks retained a formidable edge over declining issues, to the tune of almost two to one. The smaller-cap indexes, which had wilted some toward the end of the year, regained some of their erstwhile strength. But it was the NASDAQ and the NASDAQ 100 that led the way.

Also rising on the day were bond yields, with the 10-year Treasury note climbing to 2.47%, while the 30-year bond edged up past 2.80%. Meanwhile, most groups were higher, as noted, but there was some weakness in the consumer non-cyclical category, with shares of some food processors on the defensive. Shares of Dow component and household products maker Procter & Gamble (PG Free P&G Stock Report) also struggled, with that issue falling by more than a dollar a share, following a pedestrian 2017 in which the blue chip stock added just over 9%. The Dow, as noted, surged by better than 25% on the year.

The bulls then stiffened their resolve as the session wound down, with the Dow's gain passing the 100-point mark during the final half hour of trading. The NASDAQ reached the 100-point milestone, at the same time, with that composite climbing by some 1.4% at the close. Most of the big blue chips, meanwhile, did well, led by entertainment giant WaltDisney (DIS Free Disney Stock Report), which bounded ahead by more than four points on the day. At the other end of the spectrum, insurer Travelers (TRV Free Travelers Stock Report) struggled mightily. More modest price changes were recorded by the other Dow issues, as gaining stocks held onto a comfortable edge on the NYSE.  

Looking out on a new day and ahead of a series of key reports to be issued in the days to come, led by surveys on manufacturing, non-manufacturing, employment, unemployment, and the trade gap, we see that stocks were a bit higher in Asia in the overnight hours, while in Europe, the major bourses are now trading with gains as well. In other markets, oil prices, which dipped late in the day yesterday, are trending upwards now and Treasury bond yields, up solidly on both the 10- and the 30-year levels, are trading a tad lower ahead of this afternoon's release of the minutes from the last FOMC meeting. Finally, U.S. futures are pointing to a higher start when trading resumes a little later this morning. - Harvey S. Katz, CFA   

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