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After The Close - Stocks opened higher this morning, pulled back in the early afternoon, but firmed up late in the day. At the close of the session, the Dow Jones Industrial Average was ahead about 45 points, the broader S&P 500 Index was up eight points; and the NASDAQ was higher by 23 points. For the most part, it was a constructive session, with winners nicely ahead of losers on the NYSE. All of the major equity sectors made progress, with notable strength in the utilities, and in the basic materials issues. Meanwhile, the interest-rate sensitive financial stocks, which were up nominally, underperformed the broader market today.

Earlier this morning, the Labor Department delivered an upbeat employment report. Specifically, 235,000 non-farm payrolls were added to the economy during the month of February. This result was far better than analysts had expected, and follows the solid figures posted in January. Meanwhile, the headline unemployment rate dipped to 4.7% during the month of February, which is a relatively low level. Given the ongoing economic progress, the Federal Reserve may choose to lift interest rates at its next meeting. Of note, if rates continue to move higher, it is important that corporate earnings continue to advance at an impressive pace, as this will help keep stocks on an upward trajectory, and may keep investors from moving capital into fixed-income investments.

In the corporate arena, a few widely followed companies posted financial results over the past 24 hours. In the technology space, shares of Finisar (FNSR) sank after reporting weaker-than-expected numbers and issuing lackluster guidance. In the retail area, shares of Zumiez (ZUMZ) also retreated on concerns about the year-ahead business outlook.

Technically, stocks have made considerable progress so far this year. It remains to be seen if the bulls can keep their buying campaign intact, especially if the Fed continues to tighten its monetary policy over the next several months. - Adam Rosner

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

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12:40 PM EST - Most U.S. stocks began Friday’s session well above yesterday’s closing level, propelled by a better than expected February jobs report. Each of the three major indexes rode high for about an hour, before bearish influence crept in and reduced gains. The S&P 500 and tech-heavy NASDAQ remained steadily in the black, despite the up-and-down movement. Like yesterday, the Dow Jones Industrial Average was pulled down by its energy components during the morning hours, as well as Boeing (BA - Free Boeing Stock Report), which is reportedly facing a slowdown in large aircraft orders. But, a sharp upturn around 11:30 AM saw the Blue Chip index climb, with roughly two-thirds of its equities showing gains so far on the day.

The U.S Department of Labor’s February update revealed that the country added 235,000 jobs last month, well above the expected 190,000 tally. The unemployment rate, meanwhile, ticked nominally lower, to 4.7%. This employment data, the first full-month report under the new Presidential Administration, was the last major data release until next week’s FOMC. The odds for the Federal Reserve decision to raise interest rates stood over 90% heading into this morning, and are likely only bolstered by the strong employment report. Thus, investors should expect a monetary tightening at the end of the March 14th and 15th meeting, the first of three augmentations planned for 2017.

Elsewhere, the markets got an early-morning boost from a temporary rebound in crude oil prices. But, by lunchtime in New York, concerns about the glut of oil reserves dragged values even lower. Per-barrel prices have struggled this week, falling below $50 for the first time since OPEC’ sweeping production-limiting accord began in January. A continued rise in domestic stockpiles would be a major headwind here, and crude oil is set to fall roughly 7% this week, its biggest weekly fall since October.

Looking at the market sectors, energy was again the biggest laggard out of the ten major groupings. Both consumer sets, cyclical and non-, as well as technology stocks, are helping to offset softness stemming from the oil industry. Financials and healthcare, similarly subject to developments from Washington in recent weeks, are oscillating between positive and negative territory throughout the morning. Then, a late-morning rally saw the bulls make another push, pulling each of the ten sectors into the black as noontime rolled around on the East Coast, albeit briefly.

In all, the advancing issues held a 1.4-to-1 edge over declining shares as the midday neared. With a half day left in weekly trading, the bulls’ determination to make up for the week’s softness will likely be challenged by profit takers and other inflationary pressures. The probability of an interest rate hike may continue to challenge early-morning optimism, and the small- and mid-cap equity markets were exhibiting weakness. Whether this is a harbinger for another afternoon selloff remains to be seen, as all eyes turn to the Fed ahead of next week’s policy summit. - 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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Before The Bell - The penultimate day of the trading week was a listless one for Wall Street. Our sense is that investors were not willing make any major moves ahead of the week's headline event, which was today's much anticipated report on nonfarm payrolls for the month of February (see below). Thus, the major equity averages traded in a very tight band around the neutral line before finishing the blasé session just barely in positive territory. The equity market got some modest support from a rebound in oil prices after the energy commodity fell considerably earlier in the week.

The week as a whole, however, has thus far favored the bears. The lack of any major news on either the economic or earnings fronts and some nervousness about the likely upcoming battle on Capitol Hill over healthcare reform after the Trump Administration unveiled a plan to replace the Affordable Care Act on Tuesday did not give investors much reason to push the averages higher from their already lofty perches. Thus, we saw modest profit taking and some movement away from risk and into some safe-haven investments. Over the first four trading days of this week, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index were down 0.7%, 0.5%, and 0.8%, respectively.

Meantime, the week's headline event came this morning when the Department of Labor released its latest figures on employment and unemployment. With the recent attention given to when the Federal Reserve will embark on a more hawkish monetary policy course, the prevailing thought is that the employment figures may be the final impetus needed for the central bank to tighten the monetary reins. And just minutes ago, the Labor Department reported that the nation added 235,000 jobs in February, which far exceeded the consensus expectation of roughly 190,000 positions. The unemployment rate was little changed at 4.7%, and average hourly earnings for all employees on private nonfarm payrolls increased by six cents, to $26.09. The gains occurred in construction, private educational services, manufacturing, healthcare, and mining sectors.

The employment data were another strong indication that the U.S. economy is strengthening. The report, along with the recent uptick in inflation, is likely to bring further calls that the Federal Reserve will shortly begin to tighten the monetary reins, maybe as soon as this month’s FOMC meeting. This, coupled with global inflationary pressures, may soon lead to the world equity markets re-pricing Fed rate hike expectations over the next 12 months. A more hawkish central bank—Fed Chair Janet Yellen recently intoned that the economy is now on good enough footing to withstand some monetary tightening—may not, however, be well received by an equity market where valuations are looking quite stretched right now. That said …

The strong employment data is actually helping the market today, as the U.S. equity futures, which were up nicely ahead of the labor data, are holding steady in the minutes following the release. Will this continue to help the bulls? We shall see, especially if the data bring more calls for the Federal Reserve to change the direction of the monetary course that was so influential in the extended eight-year bull run we are currently in on Wall Street. A strong showing by the market today would be a major feather in the caps of the bulls, and a statement that more-hawkish policies from the Federal Reserve may be more than offset in the minds of investors by the strengthening U.S. economy, the expectations that corporate earnings growth will accelerate further over the course of 2017, and the possibility of some forthcoming business-friendly initiatives from the White House and Capitol Hill. Investors will likely look at adding some more risk to their portfolios today and that, along with the strength of the U.S. dollar, is pressuring gold prices this morning. Still, in the end, we think a more-hawkish Fed could eventually weigh on the U.S. stock market, especially with valuations looking very frothy at this time. 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.