After The Close - Stocks opened higher this morning, and managed to make further progress in the afternoon. At the close of trading, the Dow Jones Industrial Average was ahead 354 points; the broader S&P 500 Index was up 41 points; and the technology-heavy NASDAQ was higher by 143 points. Market breadth was supportive, as advancers outnumbered decliners by a healthy margin on the NYSE. All of the major equity sectors managed to advance today, with sizable gains in the technology, consumer, and financial names. The basic materials issues, while up for the day, made somewhat modest progress.
Meanwhile, it was a light day for economic news. Tomorrow, the Conference Board is slated to release the November consumer confidence figures, and many investors will likely be following that release. Looking ahead, President Trump and China’s leader are set to meet at the end of this week to discuss trade matters. Many traders on Wall Street are probably hoping that at the meeting a more favorable agreement can be reached.
In the corporate arena, few major companies posted quarterly profit reports today. However, some corporations did make headlines. Specifically, shares of General Motors (GM) moved nicely higher, in response to reports that the auto-maker plans to reduce staff and curtail some operations in North America.
Technically, stocks have been quite volatile over the past few weeks. Today’s advance was encouraging, but it remains to be seen if the bulls can mount a sustained buying campaign and push stocks meaningfully higher from here. - 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 - The most recent holiday-abbreviated week of trading —the U.S. stock market was closed on Thursday for Thanksgiving and had a half-day on Friday—was not a festive one for those long equities. It was the worst Thanksgiving week of trading since 1939, with two sharp selloffs to start the week, then a modest rally last Wednesday, before the selling resumed again on Friday. For the week, the Dow Jones Industrial Average was down 4.4%; the broader S&P 500 Index fell 3.8%; and the NASDAQ Composite finished 4.3% lower. It was the most difficult week for the Dow Jones Industrials and the NASDAQ in eight months. The selling was broad-based, with worries about the retreat in oil prices, which many pundits think is a sign of a slowing global economy, weighing on the market. The investment community also was unnerved by the continued trade dispute between the United States and China, and the impact it will have on the latter nation’s economy, which has seen its GDP growth slow in recent quarters.
On Friday, it was another highly bearish day on Wall Street, with the Dow 30, NASDAQ, and the S&P 500 Index falling 179, 33, and 17 points, respectively. A terrible performance by the energy sector—the group was down more than 3% for the session on concerns about falling oil prices—weighed on the overall market. The basic materials stocks also performed poorly and the ongoing slide for the technology sector continued during the week’s final trading session. The tech sector has struggled considerably in recent weeks, hurt by so-so earnings results, weakness in the semiconductor industry, and concerns about slowing demand for Apple’s (AAPL – Free Apple Stock Report) iPhones. Given the size of Apple’s business, the latter event has a far-ranging impact on the technology sector, and the investment community has punished technology stocks in response.
Meantime, Wall Street is starting to show some mild concerns about the U.S. economy, which is coming off two consecutive strong quarters of 4.2% and 3.5% GDP advances. Of note, the housing market has shown some signs of fatigue in recent months, with the specter of looming higher lending rates weighing on the industry. And the international trade disputes and resultant tariffs are making it more expensive for some U.S. businesses to operate. That said, we will get some important data on the U.S. consumer shortly, when the first figures on the all-important Black Friday shopping weekend come rolling in this week. Some of the recent earnings news for the retailers has failed to excite the investment community, with a number of retailing stocks getting hit hard in recent trading sessions. We shall see what the data reveals, but the initial sentiment about holiday shopping appears positive, and the futures are pointing nicely higher this morning.
Looking at the week at hand, the eyes of the investment community will be on the G20 meeting of world leaders in Argentina later this week, which will focus on climate and trade and include a meeting between President Trump and China’s President Xi. We will also get commentary from Federal Reserve leader Jerome Powell, which will be closely monitored for signs of how the central bank might proceed with regard to monetary policy in 2019 These two events highlight a busy week of news from the business beat, which will also bring data on consumer confidence, GDP (revision), new home sales, and the release of the minutes from the latest Federal Open Market Committee Meeting on Wednesday afternoon. The oil market will be closely examined too, as the recent sharp pullback in oil prices could bring talk of a slowing global economy, which has the potential to continue to roil the world equity markets. Speaking of the global economy, the major European bourses are rallying today on signs that Rome was preparing to rework the spending plans that have left it facing formal European Union disciplinary, and the news over the weekend that the European Union and the United Kingdom reached an agreement over the UK's Brexit plans. However, it should be noted that the Brexit deal still faces strong opposition from within the UK parliament, which will vote on the agreement in about two weeks.
As noted above, with less than an hour to go before the start of the new trading week stateside, the U.S. stock market is looking like it will open nicely to the upside, buoyed by some encouraging news, at least for the moment, from across the Atlantic. This morning, investors may want to keep close tabs on the consumer discretionary, energy, and technology groups, as it seems like all the market-moving news will continue to come from those three sectors. Stay tuned. – William G. Ferguson