After The Close - The stock market opened higher early this morning, but encountered some resistance as the session moved along. Then, after a series of brief ups and downs during the day, the Dow Jones Industrial Average closed off two points; the broader S&P 500 Index was down two points; while the NASDAQ was higher by 20 points. Market breadth showed a mixed tone to the market, with decliners slightly ahead of advancers on the NYSE. Further, the major market sectors were divided, as strength in the technology and basic materials issues offset weakness in the utility and consumer cyclical names.
Today’s economic news was uninspiring. Of note, housing starts declined to an annualized rate of 1.172 million units during the month of April, where analysts had been looking for a slight increase. Building permits, which tend to be a leading indicator, also softened. Elsewhere, industrial production increased 1.0% in April, surpassing the consensus forecast. Tomorrow will be a light day for economic news. However, for those traders following the commodity markets, the EIA will release its latest weekly crude oil inventory numbers. The price of oil which has firmed up a bit lately, was off slightly today, to $48.60 a barrel.
Elsewhere, in the corporate arena, a handful of leading companies delivered reports this morning. Of note, shares of Home Depot (HD – Free Home Depot Stock Report) moved higher in response to a solid release. Shares of retailer TJX Companies (TJX) retreated after it delivered mixed results. We will hear from a few more large retailers in the coming days.
Technically, equities put in a mixed showing today, leaving the S&P 500 Index just at the 2,400 mark. It is not clear what will serve as the catalyst to push stocks higher from here, given that the first-quarter earnings season is over, and the summer is approaching. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
11:40 AM EDT - After a wire-to-wire win by the bulls yesterday, those intrepid equity market optimists came out again this morning, at least for the better part of an hour, and mostly for the large-cap indexes. On point, stocks continued their ascent for the first 45 minutes, or so, of trading, before the sellers entered and the large-cap gains withered and the small-caps, already down, saw their losses increase. As the morning persisted, declining issues grabbed a larger lead on advancing stocks, while some of the heretofore higher groups weakened. With earnings season on the wane--save for the retail group--attention is starting to focus elsewhere.
And that elsewhere is Washington, where on the heels of the abrupt firing of FBI Director James Comey last week, yesterday saw news of the President's alleged sharing of reportedly highly classified information with Russian officials. Still, the big news out of Washington is the attempt to fashion tax reform. The market, it would seem, is keying on the White House and Congress' ability to put into place lower corporate and individual taxes. Of course, earnings are never far from view, even as most groups have already reported. And today was no exception.
On point, the morning saw home-improvement retailer Home Depot (HD – Free Home Depot Stock Report) report fiscal first-quarter sales and earnings that topped expectations. That strong showing helped the chain's stock rise to another all-time high and give the market--in particular the Dow Jones Industrial Average--an early boost. HD stock is up almost 20% so far this year, enabling it to run counter to the weaker path being traversed by most other retailers, such as Macy's (M). However, the Home Depot strength couldn't sustain the early advance, and as we reached the 90-minute mark of the session, most of the averages were lower.
As before, though, the selling was contained, so that as we approached the noon hour in New York, the Dow was off by just about 15 points; the S&P 500 was lower by three points; and the NASDAQ, up nicely earlier, was now little changed. However, the S&P 400 and the Russell 2000 both were off rather sharply underscoring the generally weaker tone now in place. Further, losing stocks held an increasing lead on gaining issues, while half of the major equity sector were now in the red, reversing a more positive tone earlier in the session.
In other news, two key reports were issued earlier today. In one, the Commerce Department reported that fewer homes were started in April than in March. The same was true for building permits. However, both metrics were up from a year earlier. Indeed, the overall health of the housing industry certainly is not now in doubt. We would expect this resilience to be affirmed next week when data on new and existing home sales are released. In a more upbeat issuance, the Commerce Department reported a strong 1.0% rise in industrial production and a solid increase in factory utilization during April.
So, all things considered, there is still not much for the bulls to be concerned with as we near the end of the morning hours on Wall Street, where these optimists still are positioned to perhaps begin a new buying campaign this afternoon. - Harvey S. Katz
At the time of this report's writing, the author did not have positions in any of the companies mentioned.
Before The Bell - Another week, another upbeat start to the latest five-day trading span. On point, boosted by further gains in the already strong technology sector and some strength in the energy group, stocks rallied early, with the Standard and Poor's 500 Index and the tech-laden NASDAQ climbing to all-time intra-day record highs. As to oil, crude lifted back above $49 a barrel, on reports of a meeting between Russian and Saudi officials about extending the crude energy output curbs into 2018. So, oil rallied by more than two percent.
The early gains in the market lifted the Dow Jones Industrial Average to just under 21,000 with a morning-best increase of some 90 points. Goldman Sachs (GS - Free Goldman Sachs Stock Report) and Cisco Systems (CSCO - Free Cisco Stock Report) were among the early big winners on that 30-stock blue chip composite. The NASDAQ, too, was strong, rising by more than 30 points at the morning peak. In all, as we passed the noon hour in New York, the Dow was ahead by some 85 points and the NASDAQ was better by just over 20 points.
The early afternoon brought further good news for the bulls, as the morning gains were sustained. As we moved a bit further into the session, we saw that all 10 of the leading equity groups were higher, led by the energy sector (with a gain of more than 1%), the basic materials, and the financials. Also, at that point, gaining issues were in a clear majority with about a four-to-one advantage on the Big Board. On the NASDAQ, winning stocks held about an edge of two-and-a-half to one.
The strength then persisted into the better part of the afternoon, with the absence of much in the way of negative news and further upbeat tidings on the earnings front, where reporting season has been a good one, helping to give a positive backdrop to the day's action. The bulls, meantime, continue to hold a clear edge in sentiment, as hopes remain alive for tax reform. With earnings season, save for the retailers, now largely in the books, the attention likely will soon turn back to Washington and the legislative agenda.
The market then drifted in a narrow, but notably higher, range through the balance of the afternoon session, with the Dow generally holding to gains of 70 to 100 points, after that index briefly hit the 21,000 mark. In the end, the Dow closed up by 85 points; the S&P 500 Index was better by 11 points; and the NASDAQ was 28 points to the good. The small-cap Russell 2000, meantime, jumped 11 points, or some three quarters of a percentage point, while gaining stocks continued to hold a sizable edge.
Looking out at a new day, we cast our eyes overseas, where we see that the markets in Asia were mostly higher in overnight trading, while in Europe, the early action in the principal bourses is slightly downward. Bond yields, in the meantime, are up a bit; oil is edging higher, too, after rising once again in New York trading yesterday; and our futures are mixed. So, after a solid start to the week yesterday, the bulls are a bit uncertain so far today ahead of additional retail sector results and data on industrial production due out just minutes from now. - Harvey S. Katz