After The Close - The U.S. stock market moved nicely higher for much of the day, but sharply pared its gains near the end of the session. At the close of trading, the Dow Jones Industrial Average was ahead six points; the broader S&P 500 Index was up three points; and the technology-heavy NASDAQ was higher by 14 points. Market breadth was favorable, with advancers ahead of decliners on the NYSE. The consumer and energy stocks led the major averages higher for much of the day. In contrast, the defensive utility issues, often held for income, weighed on the market.
There were no notable economic reports released this morning. Tomorrow the Consumer Price Index for the month of May will be reported. Furthermore, the FOMC will commence its two-day meeting, which will end on Wednesday afternoon with an interest-rate decision. As traders tend to watch monetary policy, this event will likely receive some attention. It should also be mentioned that President Trump’s historic meeting with North Korea’s leader will also likely be in the spotlight.
In corporate news, few major companies posted their quarterly results today. However, in M&A news, shares of Boston Scientific (BSX) moved up on news that the medical device company may be acquired by Stryker (SYK).
Technically, the stock market continues to hold up well, as we move further into the month of June. For the bulls, pushing the S&P 500 Index beyond the 2,800 mark will likely be the next key challenge. – 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 most recent week of trading on Wall Street was a productive one for those long equities. Helping stocks was some constructive news from the business beat stateside, including another encouraging report on nonmanufacturing activity. That, along with a continued positive reaction to the strong employment and unemployment report to start the month, emboldened investors. It was a quiet week on the earnings front and there was no news from the international community to ruffle the feathers of investors. For the week, the Dow Jones Industrial Average, the technology-driven NASDAQ, and the broader S&P 500 Index were each up slightly more than 1%.
On Friday, the story was the much the same as it was for most of the week, that was with the three aforementioned indexes all finishing in positive territory. The Dow 30 added 75 points; the NASDAQ climbed 10 points; and the S&P 500 Index finished eight points to the upside. Overall, most of the 10 major equity groups finished in positive territory, with the only laggards being the energy and telecommunications sectors. The day’s leadership came from the consumer staples and healthcare sectors. However, for a stretch now, the technology stocks have been the darlings of Wall Street and the main reason why the NASDAQ Composite has recently hit a series of all-time highs. On the final day of last week, advancing issues led decliners by a decent margin on both the New York Stock Exchange and the NASDAQ.
Meantime, last week’s rather quiet stretch for Wall Street will give way to a busy five-day span for traders. The focus of the investment community this week will be on the Federal Reserve and the international community. The central bank begins its two-day monetary policy meeting tomorrow, which many pundits expect will result in a 25-point increase in the federal funds rate. The prevailing thought is that will the economy is on a good enough path and there is still some signs of inflation (specifically on the wage growth and oil fronts) for the FOMC to implement another monetary tightening. Historically, though, the investment community typically does not view monetary tightening fondly. In addition to the Fed meeting, we will data on consumer and producer prices, retail sales, and industrial production. These reports will be closely monitored by investors, along with the news from overseas.
We think the tidings from the international community will play a huge role in the performance of the U.S. stock market this week. The G7 summit of the world’s economic leaders this weekend was at times contentious, with the debate over international tariffs front and center. Last week, prior to the meeting, President Trump placed tariffs on steel and aluminum imports from Canada, Mexico, and the European Union. He then threatened at the summit to cut off trade with countries—including the nation’s allies—that treated the United States unfairly. Exiting the summit, President Trump noted that the recent tariffs are designed to protect U.S. industry and workers from unfair international competition, and hoped that the final outcome would be that those countries will come to the bargaining table and in the end all trade barriers, including tariffs and subsidies, would be eliminated. President Trump’s busy week overseas now has him in Singapore for a meeting with North Korean leader Kim Jong Un, which he described as a "mission of peace."
With less than a half hour to go before the commencement of trading stateside, the equity futures are indicating a rather flat opening for the U.S. stock market. Unlike last week when there was little news of importance to move the needle drastically on Wall Street, this week will have no shortage. So far overseas, the main indexes in Asia finished modestly higher overnight, while the major European bourses currently reside in positive territory as trading moves into the second half of the session on the Continent. Stay tuned. - William G. Ferguson