After The Close - The equity markets made some irregular progress today, despite softening a bit in the late afternoon. At the close of trading, the Dow Jones Industrial Average was ahead 103 points; the broader S&P 500 Index was up four points; and the NASDAQ was higher by six points. Nonetheless, there were some areas of weakness in the market today, as decliners outpaced advancers by a narrow margin on the NYSE. The major equity groups were divided. The healthcare and industrial issues forged ahead nicely. However, the high-yielding utility and telecommunications names lost ground, owing to concerns about a rising interest-rate climate.
The economic news was limited today. However, tomorrow the pace should pick up. Specifically, we will get a look at December’s export and import prices. Wholesale inventories for the month of November will also be released. Meanwhile, in the energy area, the EIA will present its crude oil inventory figures for the latest reported week.
Finally, few major corporations posted quarterly profit reports today. However, shares of Boston Scientific (BSX) moved up after the medical device maker announced impressive preliminary sales figures. Furthermore, shares of Target (TGT) rose, as investors seemed happy with the retailer’s holiday numbers. The corporate news will pick up quite soon, as fourth-quarter earnings season picks up steam. Of note, JPMorgan Chase (JPM –Free JPMorgan Stock Report) issues its numbers in just a few days.
Technically, the stock market remains buoyant as 2018 gets under way. Looking ahead, traders will be dissecting the many corporate reports soon to be released, paying close attention to the initial guidance being offered for 2018. Many will be curious to see how the Trump Administration’s tax measures will impact profits. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell - Following a stellar start to 2018, in which the Dow Jones Industrial Average, the Standard & Poor's 500 Index, and the NASDAQ all climbed to record closing highs of better than 25,000, 2,700, and 7,000, respectively, as Wall Street commenced its best start to a new year since 2006, the stock market stumbled somewhat out of the gate yesterday morning. So, as we neared the first hour of the initial full week of January, the averages were mostly off a bit, led lower by the aforementioned Dow, which had shed more than 50 points. As we moved further into the morning, though, the NASDAQ crossed over into positive territory, if gingerly.
As before, the market was continuing to be supported by strong economic fundamentals (evidenced most recently by a benign employment report), the promise for Corporate America of the recently implemented tax cut package, and expectations that the Federal Reserve, under new stewardship, will continue to follow a most accommodative monetary policy. As to the latter, forecasts are that the Fed will likely limit its monetary tightening efforts to just three, or so, interest rate increases in 2018.
Things did not change much, if at all, as we moved into the afternoon, with just an incremental firming in the key averages as we moved into the early stages of the afternoon. At its best level of the day, for example, the Dow could only carve out a gain of some 15 points. However, the NASDAQ did somewhat better rising by nearly 25 points at its session peak. Overall, the averages would stay range-bound, with limited news keeping things quiet, for the most part.
As for influences on trading, in addition to satisfaction over the tax cut and expectations that the Fed will steer far from a policy of materially significant monetary restraint, the market was patiently awaiting the start of corporate earnings season in the coming days. The financials will lead the parade followed closely by the technology group.
In regard to earnings, consensus expectations are for results in gain some 10%-12% for the fourth quarter. As to the day's action, the health care group proved to be a drag, with the large pharmaceuticals stocks laboring.
The stock market then continued on a mixed path into the day's close, with the S&P 500 Index and the NASDAQ managing modest gains, while the Dow shed a mere 13 points. Overall, gaining stocks led losers by a 17-to-12 margin on the Big Board, while there was an even split on the tech-laden NASDAQ. In all, eight of the 10 largest equity groups ended the session higher, with the utility category leading the way on this unassuming first trading day of the week.
Further breaking things down, few stocks did much of the day, although chip maker Nvidia (NVDA) rallied further on the news that it had secured autonomous car deals, while a much-watched speech by Oprah Winfrey at Sunday night's Golden Globe awards presentation helped Weight Watchers (WTW) stock gain almost $6.00 a share. Ms. Winfrey is a large holder of the popular weight control stock. Otherwise, it was a dull and rather directionless session to kick off the latest week.
Looking out on a new day, we see that shares in Asia were extending their gains following yesterday's win, while in Europe, the key bourses were higher, as well. In other news, oil, up a bit yesterday, is trading higher, once more, reaching its best levels since 2015 this morning, while Treasury notes, which ended the day yesterday at 2.48%, are now passing hands with a yield of 2.50%. Finally, U.S. futures are showing early gains this morning ahead of a Fed speech and key economic data releases. – Harvey S. Katz, CFA