After The Close - The stock market got off to good start this morning, and extended these gains through the early afternoon. (Investors should note that the market closed early today in advance of the Fourth of July holiday.) Some of the strength today likely reflected hopes that trade relations between the U.S. and China will improve from here. While no deal was made at the recent G20 summit, the fact that further tariffs will not be implemented comes as a major relief to Wall Street. By the end of today’s session, the Dow Jones Industrial Average was ahead 179 points (to a record high); the S&P 500 Index was up 23 points; and the NASDAQ was higher by 61 points. Market breadth was quite supportive, with winners well ahead of losers on the NYSE. From a sector perspective, the consumer and healthcare stocks made progress, while the basic materials names were somewhat sluggish.
Meanwhile, traders received a full batch of economic reports this morning. Of note, the employment situation has returned to the spotlight. According to Automatic Data Processing (ADP), there were 102,000 jobs added to the private sector in the month of June. However, analysts had been looking for a higher figure. On a related note, initial jobless claims for the week of June, 29th, came in at 221,000, which was in line with expectations. Looking ahead, at the end of this week, the government will release the June employment report, and that issuance, due to its importance, will be looked at closely.
In the corporate sector, there were few widely-watched profit releases issued today. However, as the second quarter has just concluded, the pace of reports will pick up considerably. In the M&A space, shares of Symantec (SYMC) surged in price, on reports that the security software company may well be acquired by industry giant Broadcom (BRCM).
Technically, the stock market has been holding up well lately, with the major averages at new high ground. However, investors will likely want to see a trade deal reached between the U.S. and China in the near future. Further, some upbeat corporate reports and a solid outlook will likely be needed to drive stocks materially higher from these levels. - 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 - The stock market, which started the new week, month, and half with an initial buying flurry Monday morning, took a breather at yesterday's open, as lingering trade concerns with both China and Europe dented some of the earlier optimism on the international front. As to specifics, the stock market opened lower yesterday morning, with each of the averages moving downward through the first hour of trading. However, after that, there was a buying flurry that helped to briefly lift the Dow Jones Industrial Average into the green by some 50 points, before a second, but milder run of profit taking ensued.
All told, as the noon hour arrived on the East Coast, the major large-cap indexes were all lower, but just grudgingly so after the United States threatened to impose a new wave of tariffs on goods produced in Europe. That countered the earlier run of optimism following apparent progress in the negotiations on trade with China. The good news on that front, as noted, had lifted stocks early on Monday morning, before some second thoughts entered the picture to bring about a subsequent partial retracement. The good start to the week followed the best June since 1938 for Wall Street.
Meanwhile, the stock market's ho-hum performance continued as the afternoon got under way, with most stocks holding in narrow ranges. One move that was under way was in the Treasury arena, where the yield on the 10-year vehicle dipped just below 1.99%. That said, the Russell 2000 was more deeply in the red, as selling in the small-cap arena increased. There also was weakness in some of the larger industrial equities, such as in blue-chip component, Dow Inc. (DOW - Free Dow Stock Report). The selloff then continued for a brief span before the next round of limited buying ensued.
In the meantime, there was little of note to report elsewhere, as earnings season is still a week or more away and the economic calendar was comparatively light. That will change somewhat today as the Institute for Supply Management is set to release its latest survey on non-manufacturing activity. In May, that sector posted a reading of 56.9, which was comfortably above a neutral result of 50.0. Expectations are that the June tally will come in at 55.8. That report will follow, by two days, the latest survey on manufacturing, which was in positive territory for June, but very modestly so.
The buying would then pick up as the afternoon progressed, so that by 2:30, the Dow and the S&P 500 were back in the green, which the loss in the NASDSQ, never very large to begin with, had narrowed appreciably. It was to that point a day of catching the market's breath after a nice bullish run to end the first half. The market then would edge a bit further into the profit column as the afternoon wound down, so that at the close, the Dow, with some last-minute buying, would be up 69 points; the S&P 500 Index would be ahead by nine points; and the NASDAQ would be better by 18 points, as the 10-year Treasury note would fall further.
Looking ahead to a new day now, we see that the major indexes were lower in Asia overnight, while in Europe the leading bourses are pressing higher at this hour. Also, oil prices are climbing on lower U.S. stockpiles and Treasury note yields are down. All of this is pointing to a higher start in the U.S. markets when trading begins shortly. As noted, the major economic news story on the day will be out some 30 minutes into trading when the ISM reports on non-manufacturing. Finally, please note that the U.S. stock market will close at 1:00 PM (EDT) and the bond market an hour later in observance of Independence Day tomorrow. - Harvey S. Katz, CFA