Loading...
 

After The Close - Stocks opened higher this morning, strengthened further in the early afternoon, but softened some by the end of the day. At the close of trading, the Dow Jones Industrial Average was ahead 141 points; the broader S&P 500 Index was up 16 points; and the NASDAQ was higher by 29 points. There was a clear upward bias to today’s session, as winners easily outpaced losers on the NYSE. From a sector perspective, the financials, basic materials, and energy issues displayed some leadership. On a related note, the price of crude oil moved back above the $50-a-barrel mark, and that likely helped sentiment. Meanwhile the healthcare and utility stocks made more modest progress.

There were no major economic reports released today, leaving traders to concentrate on the latest batch of corporate profit reports. Of note, we heard from a few widely watched companies over the past 24 hours. In the industrial area, shares of Deere & Co. (DE) moved up, as the equipment maker delivered a solid report and provided an upbeat outlook. In the technology space, shares of Autodesk (ADSK) surged, after that company managed to impress investors. Finally, in the retail sector, shares of Foot Locker (FL) plunged, after the shoe store operator posted weaker-than-expected numbers. It should be noted that along with Foot Locker, many retailers have been posting soft results lately, and seeing their shares move lower, as a result. The emergence of large e-commerce platforms, which can operate at wider margins, may well be playing a role here.

Technically, today’s rally partially extends yesterday’s advance, and may suggest some commitment on the part of traders. However, the modest selling late that took place late in the day should not go unnoticed. For now, the S&P 500 Index still sits below the 2,400 level, and it remains to be seen how stocks will fare in the week ahead. It must be noted that the market has started to become quite volatile, due, in part, to mounting political concerns. For now, Wall Street is weighing the situation in Washington against a quite vibrant economy and corporate sector. - Adam Rosner

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

 -

12:15 PM EDT - U.S. equities opened Friday morning mostly higher, as the bulls looked to pare the sizable losses registered during Wednesday’s session. The mid-week selloff was spurred by concerns in Washington, where a federal investigation into the Trump Administration’s relationship to foreign governments has emerged as a formidable threat to the President’s lynchpin reform promises. Though the major indexes showed some modest signs of a rebound on yesterday, the overall tone remained decidedly mixed. So far this morning, however, the Dow added as much as 150 points, while the S&P 500 is trading even higher on a percentage as the midday approaches.

Looking at the market sectors reveals the broad-based nature of today’s trading. Each of the ten industry groupings is in the green, led by basic materials and energy stocks. The former’s upturn indicates to us that investors remain cautiously optimistic for President Trump’s infrastructure ambitions. True, despite recent headlines distracting from the core reasons that drove the market to record highs since November, traders are confident that the business-friendly Administration’s objectives are within reach. Both large- and small-cap equities have recovered some value today. It is unlikely, in our view, that the indexes will rise back above the pre-Wednesday level during the afternoon, but the bulls look poised to end the week on a resurgent note.

Meanwhile, U.S. crude oil broke above the $50 threshold for the first time since late April. Growing confidence among traders that OPEC will introduce an expanded and more ambitious production cut during its next meeting is behind the morning surge. This, as well as some additional reduction in domestic stockpiles, would ostensibly help prices continue to rebound. While it still trades below its one-month high (roughly $53 per-barrel), the weeklong run up was nonetheless a welcome bounce back for the embattled commodity.

Is the market on its way to a bona fide correction? Our inclination says no, and this week’s movement was a short-term reaction to the elevated valuations. Still, a continuation of the fears that sent averages lower this week would likely lead to some more selling. The bullish market relies on the passing of key tax and regulation reform, which the Trump Administration still thinks it can implement by the end of the year. As always, stay tuned. - Robert harrington

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

  

-

Before The Bell - Following the sharpest one-day setback since last September, as worries mounted about the future of the Trump Administration, the stock market mounted a nice comeback yesterday. On point, after a softer opening to the latest session, in which the Dow Jones Industrial Average quickly fell by some 50 points on top of the 373 points surrendered the day before, the buyers stepped in. To be sure, the bulls did not mount a full-fledged charge early on, but they did erase the losses and generate a modest morning return to the black, led by the technology stocks. 

The market then meandered for a time in early afternoon, with the principal indexes moving about in a fairly tight range modestly above the neutral line. However, as we moved further into the afternoon, especially as we got into the final two hours of the trading day, the averages strengthened nicely for a time. In part, the resumption of strength after the opening-hour selloff was date driven, as a pair of economic reports emboldened traders. Specifically, issuances on manufacturing in the greater Philadelphia area showed a rise, whereas a decline had been expected, and the latest week noted continued good news on the layoff front.

Such tidings encouraged investors to return to the market following the worst downturn in eight months in the wake of the political uncertainty engendered by a federal investigation of the Trump Presidency. Such an investigation could lead to additional problems for the Administration, and might put the business-friendly policies espoused by Mr. Trump and other Republicans into doubt. Some dissenters, meantime, said that even if we have a prolonged investigation in Washington, it might not hurt the economy. That is possible, but it would delay tax reform, in all likelihood, and that has been a big part of the post-November rally in equities.  

The market then continued to gather strength as we moved further into the afternoon, with the Dow's gain at one point reaching about 150 points. One of the factors that had earlier pared the moderate morning rally was news that a speeding car had crashed into a crowd of pedestrians in New York City's Times Square, killing one and injuring more than a dozen. But when the crash was suggested to be an accident, though tragic as it was, the market resumed its climb. Stocks then strengthened further, as noted, during the afternoon's latter stages.

In other news, a pair of Dow heavyweights reported their results, with giant retailer Wal-Mart Stores (WMT - Free Wal-Mart Stock Report) pleasing investors with its quarterly metrics. That stock rallied in response, gaining more than two points on the day, as that chain's bottom-line beat ran counter to the mostly downbeat news in this sector. In fact, several beaten down retail stocks faltered further in dealings yesterday. At the same time networking behemoth Cisco Systems (CSCO - Free Cisco Stock Report), which has seen its stock act well for much of this year, also issued its quarterly results to a less-welcoming response. That stock was the Dow's worst performer on the day. 

The market's drift at just modestly higher levels persisted into the close, as the final tallies indicate. When all was said and done, the Dow had regained a small portion of the prior day's losses, recovering by 56 points; the S&P 500 Index had recouped nine points; and the NASDAQ, showing leadership, was up 44 points. More restrained increases were tabulated by the S&P Mid-Cap 400 and the small-cap weighted Russell 2000. Overall, just a few more stocks rose than declined on the NYSE, while there was an even split of gaining and losing groups among the top 10 equity sectors. So, it was just a mildly reassuring comeback by the bulls.  

Looking out on the final trading day of the week, we see that stocks in Asia were higher overnight, while on the Continent, the principal European bourses are showing early gains. Elsewhere, oil is trading up so far this morning, while interest rates on Treasury issues are flat, after rising yesterday. Meanwhile, our equity futures are now suggesting a modestly higher opening when trading resumes in less than an hour from now. Finally, this should be a light day on the economic calendar, with politics likely to dominate the market backdrop. Stay tuned.   - Harvey S. Katz 

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