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After The Close - U.S. stocks began the day on a positive, albeit uneven note. Each of the major indexes spent most of the opening hours above their respective breakeven line, save for the Dow’s momentary, finance-related dip shortly after the opening bell. But after traders digested some mixed information from Corporate America and the business beat, most equities extended their morning gains well into the afternoon. Market breadth favored advancing shares by a three-to-one clip, while each of the market sectors wound up in positive territory when all was said and done. The Dow and S&P 500 each set all-time intraday trading highs in the final hour, while the tech-laden NASDAQ, today’s strongest performing index, rose to within striking distance of its own high mark, as well.

Despite the broad-based gains in nearly every pocket of the exchange, there was some selling pressure stemming from the earnings front early on. Disappointing updates from a trio of banking giants contributed to the financial sector’s morning struggles. That is, while JPMorgan Chase (JPM - Free JPMorgan Chase Stock Report) and Citigroup (C) each beat consensus earnings estimates for the June interim, lackluster investment income figures and less-than-encouraging outlooks weighed on investor confidence. Much of this can be tied to the Federal Reserve’s recently dovish tone on interest rates, though an underwhelming performance by Wells Fargo (WFC) also sent that company’s stock lower. Those with bullish positions are likely hoping for better guidance trends as earnings season ramps up over the next several weeks.

As for the business beat, today’s newly released economic data were choppy, at best. Though investors were likely pleased by a solid industrial production release, June retail sales came in 0.2% lower than in the previous month, dragged down by department stores and restaurants. Meanwhile, inflation continues to lag the Federal Reserve’s 2% target, underscored by an uninspiring reading from the Consumer Price Index. Still, these mostly disappointing updates only served to amplify Fed Chair Janet Yellen’s moderated outlook for the central bank’s rate-hike plans, which has helped to spur the averages higher during the second half of this week.

Elsewhere, U.S. crude oil turned in a solid weekly gain of 5.2%. The commodity weathered persistent concerns over OPEC’s ability to limit output from within its member and partnering nations. Helping to offset these worries was a reported decline in U.S. inventories, which fell 7.6 million barrels last week, the biggest week-to-week reduction in ten months. Also serving to buoy sentiment were production issues in Nigeria, and, more recently, renewed demand for crude oil in China. The latter is particularly encouraging for the domestic outlook. The Asia superpower saw crude imports tick nearly 14% higher during the first six months of the year, a positive tailwind that was partly responsible for the International Energy Agency’s decision to raise demand estimates for the near term.

Over the next several weeks, we expect to see updated corporate earnings data play an outsized role in determining how the market moves. Sure, investors also will be keeping a close eye on the Capitol, particularly as it relates to the healthcare developments, but the performance of Corporate America will be the headlining force in trading through early August. Thereafter, the seasonally slower activity during August will give way to Federal Reserve-related predictions and to speculation as to whether or not the Administration can pass key reform proposals before next year’s mid-term election season begins heating up. For now, the bulls remain in control of this still-strong market. - 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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11:40 AM EDT - The final day of trading in a week that can be characterized as a good one for those long equities is seeing the major indexes hold modest gains as we move toward the midday hour on the East Coast. The day has been jammed pack with reports from the earnings and business beats. On both fronts, the data can be termed choppy, which is possibly the reason why neither the bulls nor the bears have made a big move. Overall, the major averages are slightly in positive territory, but it should be noted that the NASDAQ is on pace for its best weekly showing in more than two months and the Dow Jones Industrial Average is looking at its best five-day stretch in seven weeks.

The busy day for Wall Street brought four reports on the U.S. economy this morning. The data proved uneven. Before the commencement of trading stateside, the investment community received a disappointing report on retail sales, which saw an overall decrease of 0.2% during the month of June. Likewise, the Consumer Price Index uninspiring last month, an indication that inflation is still running below the Federal Reserve’s target of 2%. Conversely, industrial production climbed sequentially in June. Then a half-hour into the trading session, the University of Michigan reported a sharp drop in consumer sentiment. Overall, the reports were another signal that growth of the domestic economy may be slowing a bit. The uninspiring economic data, along with some banking news (more below), has pushed the rate on the 10-year Treasury note lower, which is prompting some sector rotation among the major equity groups.

As noted, we received some noteworthy earnings news this morning, as the second-quarter earnings season kicks off. Banking giants JPMorgan Chase (JPM Free JPMorgan Stock Report) and Wells Fargo (WFC) reported mixed results, but the investment community seemed more disappointed by commentary that net investment income, a key metric for the banks, may remain lackluster over the second half of 2017. Shares of both banking behemoths are lower on the net investment income margin guidance. The reports are weighing on the financial sector as a whole.

Speaking of the top-10 sectors, as noted, we are seeing some rotation among the groups. Not surprisingly, with fixed-income yields falling, the higher-yielding equities are garnering interest, especially among income-oriented investors. The utilities, telecom, and consumer staples issues, along with the commodities groups, are providing the leadership on Wall Street. The basic materials and energy stocks are getting a lift from a modestly weaker dollar. Looking forward, investors should keep a close eye on the energy stocks, as we will receive the latest rig count data at 1:00 PM EDT. This report has had an effect on energy stocks in recent months, given the increased attention the energy sector is getting these days. Meantime, on the negative side, the consumer discretionary stocks are putting in a lackluster performance, a likely reaction to the noted disappointing retail sales and consumer sentiment data this morning.

Looking ahead to the second half of the session and the final trading hours of this week, there is a slightly bullish undertone to trading, which could give the bulls a boost into the closing bell. Notable market fundamentals include a nearly three-to-one lead for advancing issues on the Big Board, a slightly positive spread on the NASDAQ, and all of the major equity indexes in the black, which has been the case during much of the morning hours. 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 - Following back-to-back uneventful sessions on Wall Street on Monday and Tuesday, with trading on the latter day influenced briefly by political concerns regarding e-mails and Donald Trump Jr., and a strong Federal Reserve-driven advance on Wednesday, the stock market was back to dull and duller yesterday.

Specifically, the market started out decently enough, with the Dow Jones Industrial Average moving ahead to an early advance of some 35 points. But that proved to be the high-water mark for the session, and soon after the key averages dipped back some, but never really faltered badly, moving back and forth between modest advances and small losses.     

Indeed, like the averages themselves, the various sectors changed little, with much of the day seeing limited movement. Still, what change there was, remained more positive than not, with most of the 10 leading sectors in the black, but none showing any special strength. Not surprisingly, rising and falling stocks were in a tight band, with gaining issues in a slight lead for much of the day. 

Behind this pedestrian trading were strong performances by the retail group yesterday, after an upbeat report from big box store Target (TGT) late on Wednesday and further reassuring testimony by Federal Reserve Chair Janet Yellen, offset by a slight advance above expectations in weekly jobless claims and logical concerns ahead of the start of the second-quarter earnings reporting season.  

So, stocks weaved back and forth, never breaking one way or the other with any conviction in dull trading ahead of a slew of profit issuances over the next fortnight. On the whole, expectations are high, and most pundits expect Corporate America to do quite well with its results. Of course, with the market mostly priced for perfection, expectations likely will need to be met.

As to economic news, in addition to the higher jobless claims totals and the Yellen testimony, the Labor Department early yesterday issued the Producer Price Index, which gauges inflation at the wholesale level. Here, prices rose by 0.1% in June, up from a flat reading in May, but well off from a 0.5% surge in April. Low inflation has been a hallmark of the extended business expansion.

The market continued its unimposing performance through the afternoon's conclusion, when there was a brief upward bounce, with a modestly positive bias in place as trading ended. As the closing bell sounded, the Dow was ahead 21 points; the S&P 500 Index was better by five points; and the tech-driven NASDAQ was ahead 13 points. Gainers also topped losers on the NYSE.

Now, a new day begins, with early trends marked by a rise overnight in Asia and a slight dip in Europe so far today. Elsewhere, oil is higher on rising demand; gold is ticking up; and Treasury yields are down following the release of weaker retail sales (see below).  Finally, U.S. equity futures are now showing small advances.

As to the retail number, figures from the U.S. Commerce Department showed that retail spending, which had been expected to gain 0.2% last month, actually edged down by 0.2%. That followed a revised 0.1% decline in May (initially reported as a drop of 0.2%). In all, sales rose by 2.8% over the past year. Meanwhile, excluding auto sales, the aggregate decline also was 0.2%. Auto sales actually ticked up slightly last month. Helping results last month were gains building materials outlets and health and personal care stores. Declines were registered at department stores (off 0.7%) and at restaurants. Internet spending rose 0.4%. All in all, this was a most disappointing report and could engender a somewhat worse second-quarter GDP outcome than the 2.5% increase we have been forecasting.  Finally, the Consumer Price Index was flat in June following a 0.1% drop in May.   - Harvey S. Katz 

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