After The Close - Equities lost considerable ground today, with traders becoming increasingly concerned about the shifting political landscape in Washington. Specifically, stocks opened higher this morning, but quickly pulled back and spent the remainder of the session slipping into negative territory. At the end of trading, the Dow Jones Industrial Average was down almost 172 points; the broader S&P 500 Index was off 18 points; and the NASDAQ was lower by 77 points. Market breadth was negative, as decliners outpaced advancers by a moderate margin on the NYSE. Most of the major market sectors lost ground, with pronounced weakness in the technology and financial stocks. Meanwhile, the defensive utility issues, while slightly lower for the day, managed to display some relative strength.
In economic news, the Consumer Price Index advanced 0.2% during the month of February. While this result was largely in line with expectations, traders may have been relieved that inflationary pressures do not seem to be intensifying, just yet. Tomorrow, the Producer Price Index will be released, which should provide additional information on this matter. Of note, the FOMC is slated to meet next week to decide whether, or not, to lift interest rates. The economy, the employment situation, and the inflation outlook, will all be studied, as the rate decision is made. At present, most on Wall Street expect a small (quarter of a percentage point) hike will be approved.
In the corporate sector, shares of Dick’s Sporting Goods (DKS) rose slightly today, even as the retailer posted mixed results and offered a disappointing outlook. The sporting goods store has been in the media lately, after its decision to limit sales of some firearms. In the M&A space, shares of Qualcomm (QCOM) were under pressure today, as its proposed merger with Broadcom (AVGO) has been halted.
Technically, the stock market took a notable step back today, after rallying for about a week, or so. Today’s selling leaves the S&P 500 Index just above its 50-day moving average, located at the 2,745 level. It remains to be seen if the bulls can keep stocks from slipping below this widely watched technical area. - 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 - After the fireworks on Friday, which came about following the government's release of stronger-than-expected job creation numbers, along with below-trend wage growth, the stock market jumped out to a solid gain yesterday morning. To recap, the Labor Department reported a jump of 313,000 in non-farm payrolls during the month of February. That one-two punch (the lower wage growth meant a lessening of inflation fears), which unleashed a torrent of equity buying this past Friday, helped stocks rise again at the open yesterday.
On point, the Dow Jones Industrial Average, a 440-point winner on Friday, pushed ahead by more than 110 points over the initial stages of trading yesterday. But that gain was quickly overcome, and within a half hour, or so, the blue chip composite was in the red, falling to a morning-worst deficit of some 160 points. However, the NASDAQ, which soared to an all-time high last Friday, continued to barrel ahead climbing by more than 45 points early and then sustaining that strong advance into the early-to-mid-afternoon.
So, there was a split decision on the stock market as the session moved along, with the technology group moving to the head of the class, providing the best gain among the 10 leading equity sectors, while the big losers were the industrials. The perception is that the recent imposition of a 25% tariff on steel and a 10% levy on aluminum will be felt most by this latter group, a big user of such metals. Thus, Boeing (BA – Free Boeing Stock Report) and United Tech (UTX – Free United Technologies Stock Report) were among the prime casualties yesterday. The smaller composites, such as the Russell 2000, by comparison, held up well.
This split decision persisted through the remainder of the afternoon, with the market continuing to be helped by the perception that corporate earnings, the big driver for stocks, would continue to do well. Indeed, another strong quarter seemed upcoming in the opening period. On the other hand, there still are concerns about inflation and the Federal Reserve, with the latter set to hold its FOMC meeting next week. Nearly 90% of the pundits now expect the Fed to raise its interest rate target by one-quarter of a percentage point at that time.
As noted, there was a split verdict throughout the remainder of the session, with the Dow, once off by more than 180 points, before halving that deficit into the late afternoon, finally closed off by 157 points. Meanwhile, the S&P 500 Index ended the day off four points, but the NASDAQ, on strength in shares of Apple (AAPL – Free Apple Stock Report), which hit another all-time high on the day, closed up 28 points, while the small-cap Russell 2000 managed a four-point advance. All of this took hold on a day that saw a few more stocks gain on the Big Board than decline.
Looking out to a new day, we see that stocks were mixed across Asia in the overnight hours, while the markets in Europe are thus far showing early slight gains. Also, yields on the 10-year Treasury note, which fell a bit to 2.87% in yesterday's trading are now passing hands at that same level. Meanwhile, oil prices are up pennies a barrel in New York. Finally, U.S. futures are pointing to a generally higher start when trading resumes a little later this morning. – Harvey S. Katz, CFA