After The Close - The U.S. equity markets had a bit of a see-saw session but ended the day on the upside.
Sentiment was upbeat early on, likely buoyed by word that North and South Korea would be sitting down to peaceful discussions late next month. This would mark their first summit meeting in more than ten years. North Korean leader Kim Jong Un even hinted at a possible reunification of the two nations. However, lingering concerns over potential protectionist trade policies both here and abroad soon returned to the fore, sending shares tumbling. Specifically, speculation that White House economic adviser Gary Cohn would leave his post, in opposition to President Trump’s proposed tariffs, apparently rattled investors. However, the mood quickly improved after Republican Senator David Perdue indicated that Trump was open to the idea of modifying his position on the tariffs.
By the closing bell, the Dow Jones Industrials squeaked by with a nine-point gain; the broader S&P 500 Index was up by seven points; and the tech-heavy NASDAQ fared the best of the lot gaining 41 points, or just over half a percent. In terms of sector performance, gainers held the advantage over decliners. Well out in front to the upside were basic materials issues, surging 1.5%. Meanwhile, consumer cyclicals, financials, industrials and technology groups were up more than half a percentage point. At the other end of the performance spectrum, utility stocks fell 1.0%, while healthcare issues dipped 0.2%.
On the other side of the Atlantic, the European bourses ended the day below their highs from the session, but still on the plus side. Britain’s FTSE 100 led the pack, tacking on just under half a percentage point. Germany’s DAX inched up about a quarter percent, while France’s CAC-40 ended just above breakeven. – Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before The Bell - Traders and investors returned to Wall Street yesterday, as the first full week of March commenced following what had been one of the more tumultuous five-day spans for the stock market thus far this year. On point, after stocks had rallied strongly to start the week on Monday, sellers got into the act beginning on Tuesday, and their efforts helped to take the Dow Jones Industrial Average down by some 1,100 points during the middle three days of the week, before a tepid rally attempt got going late on Friday.
Behind the changing sentiment was initial confidence in the economy, which was followed, in quick succession, by concerns about inflation, worries about a more aggressive interest rate stance by the Federal Reserve, and its new Chair, Jerome Powell, and then, after pending steep tariffs on steel and aluminum were proposed by the President, concerns about a looming trade war. Indeed, unless the President modifies his proposals on the trade front, the idea for which is now being tossed around, such trade hostilities could begin shortly.
So, that is where we stood, as trading resumed yesterday morning. As to market action, the early read on stocks was notably lower, with the Dow Jones Industrial Average falling quickly by more than 150 points, on those trade war worries. The market then quickly reduced those losses, with the Dow moving into the green at the 90-minute mark. The other indexes also went nicely positive after the President signaled that he might lift the tariffs on steel and aluminum if Canada and Mexico would agree to a new NAFTA deal.
As that offer reduced, for the moment, fears of an all-out trade war, the market continued to rally into the lunch hour. It would appear, at least for now, that with earnings season in the rearview mirror and the FOMC meeting still two weeks away, that the global trade situation is now paramount on Wall Street's mind. In all, as we reached the noon hour in New York, the Dow was ahead some 180 points after a brief sojourn past the 200-point advance mark, while gains of 21 and 57 points were tallied by the S&P 500 and NASDAQ, respectively.
Stocks continued to trend higher into and through the early afternoon, with the Dow Jones Industrials retaining its triple-digit advance on those lessening trade war fears. Then, as the afternoon progressed, more dramatic buying ensued, with the Dow surging past the 200-point threshold, and later on to advances of better than 300 and 400 points, finally cresting at 24,961, for an upturn of just over 420 points, before some late selling took hold to finally place the day's win at 336 points in that composite. The NASDAQ, meantime, surged 73 points.
In sum, it was the possibility of some rethinking of the tariff policy that aided the bulls. Comments by U.S. House Speaker Paul Ryan that he, too, opposed the broadly applied tariffs also helped the bullish cause. Meanwhile, in corporate news, French insurer AXA announced that it would be trying to buy U.S. insurer XL Group (XL). Shares of the latter surged better than 20% on the news, closing at just under $56 a share. Save for that bit of upbeat news, the major preoccupation remained the suddenly worrisome trade issue.
Looking out to a new day now, we see that shares in Asia were trading higher during the overnight hours, while in Europe, meantime, the major bourses are now trending higher, as well, despite worries about Italy's elections. In other markets, oil prices are up a bit and Treasury note yields, up in dealings yesterday, are now headed higher, too. Finally, in our futures market, the early signs point to a positive opening for the equity market when trading resumes at 9:30 (EST) this morning, on those lessening global trade fears. – Harvey S. Katz, CFA