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After The Close - The stock market opened higher this morning, and managed to maintain its gains throughout the afternoon. At the end of the session, the Dow Jones Industrial Average was up 85 points; the broader S&P 500 Index was up 11 points; and the NASDAQ was higher by 28 points. Market breadth was favorable, with winners well ahead of losers on the NYSE. Essentially all of the major equity groups pressed ahead today. There were notable gains in the energy and basic materials issues. On a related note, the price of crude oil rose about 2%, to almost $49 a barrel, on hopes that restrained production levels will support higher prices. Some technology stocks also performed quite well, particularly those specializing in cyber security. Meanwhile, the consumer cyclical names lagged the pack a bit, but still managed to make some progress by the end of the day.

It was a light day for economic news. However, the Empire State Manufacturing Survey, which tracks business conditions in the greater New York region, registered a weaker-than-anticipated reading for the month of May. Tomorrow will be a busier day, as housing starts and building permits for the month of April are due out. A monthly report on industrial production is also slated to be released. Elsewhere, in the corporate arena, few leading companies released their financial reports this morning, as the first-quarter earnings season has largely concluded.

Technically, equities moved higher today, pushing the S&P 500 Index back above the widely watched 2,400 mark. The fact that the session ended on a firm note was encouraging. However, it remains to be seen if the bulls can produce a sustained buying campaign over the next few days. - 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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11:50 AM EDT - The major equity averages started the new trading week to the upside. The recent modestly weaker large-cap Dow Jones Industrials’ rise was near the triple digits as we approached the noon hour on the East Coast, and the S&P 500 Index joined the surging tech-heavy NASDAQ Composite in the plus column. There does not appear to be any major catalysts driving the market higher this morning. It may just be a matter of some notable selective bargain hunting in sectors that have recently been out of favor on Wall Street. Although equity valuations are looking stretch, investors are still not willing to take profits when earnings and outlooks are positive for most of the S&P 500 companies and the Federal Reserve still is very supportive.

All of the major equity groups are trading in positive territory in an up tape for Wall Street. This morning, we are seeing some notable sector rotation. Indeed, the interest is picking up in some of the sectors (i.e., energy, banking, and consumer discretionary) that have been out of favor for much of 2017. The leadership is coming from the aforementioned groups. In particular, the energy stocks are getting a big boost from a jump in crude oil prices. The higher prices are the result of an agreement between oil-producing nations Saudi Arabia and Russia to extend supply cutback in the coming months. This should help alleviate some of the glut of crude supply in the market.

In general, the buying is broadbased, with advancing issues leading decliners by around five to one on the New York Stock Exchange and nearly three to one on the NASDAQ. It should be noted that the broader small- and mid-cap sectors are sporting even bigger advances than their large-cap peers, which may be a good indication that the bulls are going to see the buying through to today’s closing bell. As we approach the midday hour on the East Coast, the small-cap Russell 2000 and the S&P Mid-Cap 400 Index are up around 1%.

Investors, emboldened by the strong showing by Corporate America during the first-quarter earnings season; positive economic data, including a strong report on job creation earlier this month; and a still accommodative Federal Reserve continue to add more risk to their portfolios. The S&P 500 Volatility Index (or VIX), a measure of nervousness among investors, still sits at very low level, trading in a range that has been seen only a few times during the last 25 years. 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.

 

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Before The Bell - The U.S. equity market turned in a mixed performance last week. The trading was very contained, though, with the major U.S. equity averages never straying too far from the neutral line. There was very little of what would be considered market-moving news to push the indexes in either direction, particularly higher off of their already lofty perches. Overall, the Dow Jones Industrial Average, which has closed modestly lower for four consecutive session, and the broader S&P 500 Index, slightly in the red in three of the last four trading days, were weaker, while the NASDAQ continued its surge. The tech-heavy composite has finished higher in six of the last seven trading days and is on a four-week winning streak.

On Friday, it was another nondescript performance for the equity market. In general, there was a bearish tone to the trading session, with decliners leading advancers on both the New York Stock Exchange and the NASDAQ. The biggest laggards were the industrial and consumer discretionary sectors, with the latter being hurt some by a softer-than-expected reading on retail sales for the month of April. Conversely, we saw some modest buying in the higher-yielding sectors, with reports at the end of the week showing only a modest uptick in consumer and producer prices last month. The lack of inflationary pressure may cause the Federal Reserve, which is expected to tighten the monetary reins in June, to still be a bit more guarded with regard to the total number of interest-rate hikes it implements this year. This would make the higher-yielding equities a bit more attractive to income-oriented investors. Hence, the buying we saw to end the week in the utilities and telecommunications groups.

As noted above, there was little of what would be deemed market-moving news to push the indexes higher last week. The earnings and economic beats, save respective reports on Walt Disney (DIS - Free Disney Stock Report) and retail sales, were rather light on headline news. That made it hard for investors to push the major averages, where valuations are looking quite stretched right now, with the NASDAQ and S&P 500 Index hitting all-time highs recently, materially higher. Thus, we saw investors take a bit of a breather, catching their breath after a whirlwind few weeks in which they were inundated with a plethora of earnings reports, the latest FOMC interest-rate decision, and the April employment and unemployment data. In general, the earnings news has been rather positive and provided some support for the major equity averages. But, perhaps the most encouraging aspect of the reporting season is that we have seen a decrease in the number of companies lowering their near-term guidance, particularly at the top line. This is a good sign that the positive earnings news will continue for the remaining quarters of this year. This has to be taken as a positive sign for the near-term performance of the U.S. equity market. Investors appear to buying such, as they continue to add risk to their portfolios. The S&P 500 Volatility Index (or VIX), also known as the “fear gauge,” is trading at lows not seen in 25 years.

Looking ahead to the new trading week, it may be more of the same for the U.S. equity market, as the market-making news may once again lack the headline grabbing stories. On the earnings beat, we will get reports on the retailing sector, which may not be a good scenario for stocks, given the recent struggles of the nation’s leading retailers. (Retailing giants Home Depot (HD - Free Home Deport Stock Report) and Wal-Mart Stores (WMT - Free Wal-Mart Stock Report) are scheduled to report their latest quarterly results this week.) Likewise, it will be another light week on the business beat, with only two notable reports. The latest data on housing starts and industrial production will both be released before the commencement of trading tomorrow morning. In this environment, we expect more of the same trading pattern we saw last week, barring no unforeseen developments from Washington D .C. or the international community.

With less than an hour to go before the start of trading stateside, the equity futures are indicating a mixed opening for the U.S. equity market.  That said, where we are seeing some notable movement this morning in the energy area of the commodities market, with the price of oil both here and on the Continent higher. 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.