After The Close - The major U.S. stock indexes started the day in positive territory and, although trading became somewhat mixed later in the session, most shares ended in the plus column.
News was light on the economic and political fronts today, allowing investors to put aside worries over potential trade wars, at least temporarily. This morning, the government released its Job Openings and Labor Turnover Survey results for May, which, in large part, supported the argument that the U.S. economy remains on track. Specifically, hirings were up as more Americans left their existing positions for greener pastures. Also, layoffs were down. Altogether, 2.5 million jobs were created in the 12 months ending in May. However, job openings declined, largely due to the increase in hirings. The news ensures that Thursday’s June inflation report will be more closely watched for signs that rising wages may prompt the Fed to step up its rate-hike plans.
At the closing bell, the 30-stock Dow Jones Industrial Average was ahead by 142 points, while the broader S&P 500 was up by nine, both marking a fourth-straight day to the upside. Meanwhile, the tech-laden NASDAQ bounced back from a mid-afternoon dip into the red, ending the day up by three points. In terms of market sector performance, most groups were in the green, led by utilities (+0.9%), consumer noncyclicals (+0.8%), and energy shares (+0.6%). Financials were the only laggards, off by about one-quarter of a percentage point. Bank stocks were the main drag, as shares fell ahead of Friday’s scheduled earnings releases from JPMorgan Chase, (JPM – Free JPMorgan Chase Stock Report), Citigroup (C), and Wells Fargo (WFC). Elsewhere, light sweet crude edged higher, to just over $74 per barrel, on global supply concerns.
Lastly, trading was positive on the European bourses, led by gains of about half a percentage point each for Germany’s DAX, and France’s CAC-40. Britain’s FTSE 100 managed a modest increase despite mounting concerns that recent high-level government resignations would prompt a new general election. - Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before The Bell - Following up on a very healthy gain on Friday, as Wall Street moved away from worries about trade and focused, instead, on some good news on the economy, notably a strong employment report headlined by June's creation of 213,000 new jobs, the stock market began the new trading week on an even stronger note. Specifically, the Dow Jones Industrial Average lit things up with an early advance of 200 points. The upturn was led by the financials, with banking giant JPMorgan Chase (JPM – Free JPMorgan Stock Report) in the lead.
The strength in the banking group reflected a turn away from trade and toward earnings, with second-quarter reporting season nearly at hand. The first reports will be heavy on the banking front and expectations are quite high. Meanwhile, technology also did well, with some high-profile names in the lead on the advancing front. Tech, too, will be in the vanguard of the early reporters over the next couple of weeks. Of course, trade is never far from the picture, but at least for now, it seems to be taking a backseat.
Then, as we neared the end of the first hour, the market strengthened further, with the Dow picking up some extra momentum, gaining more than 225 points. However, in a reversal of sorts, the NASDAQ lagged, being up by just about 20 points, despite the gains in technology. That composite would soon join the party, though, advancing some 40 points as we hit the noon hour. The Dow, meantime, would push ahead by more than 300 points on upbeat fundamentals and optimism about the forthcoming earnings season.
Thereafter, the combination of diminished fears on the trade front, at least for the time being, and confidence in a strong economy and a favorable earnings reporting season would combine to keep the rally going into the middle of the afternoon. Still, there was some brief backtracking as we headed toward the final two hours, but nothing substantial. So, as we reached that point of the session, we saw that nine of the 10 leading equity groups were still higher, led by the financials, energy, and the industrials. The utilities were lower, however.
The rally would carry into the close, with instances of selling kept to a minimum, so that as we ended the session, the stock market was fairly near the day's highs, with notable gains in all of the large-cap indexes and even some modest strength on the small-cap side. All told,, the Dow Jones Industrials led by the financial and industrial behemoths, gained a massive 320 points, while advances of 24 and 68 points were tallied, respectively by the S&P 500 Index and the NASDAQ. The Russell 2000, meantime, added 10 points.
Looking out to a new day now, we see that the major markets were mostly higher in Asia overnight, while in Europe, the bourses are trending upward, as well, at this hour. Also, oil, a winner again yesterday, is now moving higher once more; Treasury note yields, up yesterday, are nudging forward slightly; and U.S. futures are posting early increases of some note, as earnings season gets ready to arrive, with very high expectations. We think these expectations will be realized. - Harvey S. Katz, CFA