After The Close - The stock market put in a respectable showing today, as traders headed into a new week on Wall Street. At the close of the session, The Dow Jones Industrial Average was ahead roughly nine points; the broader S&P 500 Index was up three points; and the NASDAQ was higher by 22 points. Market breadth was positive, as advancers outpaced decliners on the NYSE. From a sector perspective, the energy and basic materials issues displayed solid leadership, possibly helped by sharply higher crude oil prices. In contrast, the telecom and healthcare names weighed on the market.

There were no major economic news items released this morning. Tomorrow will be a light day for reports, as well. Given the lack of news, traders will likely be turning their attention to the corporate arena, as many companies are in the process of reporting third-quarter numbers. Furthermore, investors will be closely monitoring the political developments in Washington, with the hope that the Administration’s tax-reform measures will gradually gain acceptance.  

Meanwhile, a few widely followed corporations weighed in with reports this morning. Specifically, shares of Sysco (SYY) moved lower, even though the food distributor posted respectable results. In addition, shares of CVS Health (CVS) retreated after the drug store operator posted its numbers. Elsewhere, there was some M&A news worth mentioning. Specifically, Broadcom (AVGO) has offered to purchase Qualcomm (QCOM) for $70 per share. The deal, if approved would be one of the largest in the technology sector.

Technically, the stock market continues to forge ahead, as we move through the final quarter of 2017. Traders seem pleased with the progress being made in the broader economy, as well as in the corporate sector. However, equity valuations are somewhat elevated, and it is unclear what will serve as the catalyst needed to boost the stock market further from here.  - Adam Rosner

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


12:00 PM EST - The major equity indexes, which started the week at record highs, are continuing their move higher this morning. The main catalysts appear to be some more positive earnings reports and some merger and acquisition talks from Corporate America, the latter of which is a sign of a healthy equity market. Overall, advancing issues are leading decliners on both the Big Board and the NASDAQ and there are slightly more up than down arrows among the 10 major equity groups.

The market also seems to be having a positive reaction to last week’s Federal Reserve news, which included the decision by the central bank to hold interest rates steady and the nomination of Jerome Powell by President Trump to lead the Federal Reserve in 2018, replacing current Fed Chair Janet Yellen. Mr. Powell has historically been more dovish than hawkish with regard to monetary policy, which the market seems to like, and he will likely push for some more deregulation of the banks next year.

Turning back to today, the positive earnings news was led by apparel maker Michael Kors (KORS), which reported better-than-expected earnings and said that the drop in comparable sales was smaller than expected. Meantime, the talks of M&A are swirling this morning. Of note, Broadcom (AVGO) has bid $70 a share for recently struggling Qualcomm (QCOM), which would equate to a $105 billion deal, excluding the assumption of debt. Meanwhile, rumors surfaced that arch rival chipmakers Advanced Micro Devices (AMD) and Intel (INTCFree Intel Stock Report) are teaming up on a new project, likely in PC graphic chipmaking, to battle Industry rival NVIDIA (NVDA). And finally, reports surfaced that Japan-based SoftBank is willing to re-engaged Charter Communications (CHTR) about a potential deal. Shares of the latter company are up on the news, while the stock of Sprint (S), which SoftBank owns a huge position in, is down sharply after news surfaced this weekend that Sprint has ended its merger talks with T-Mobile US (TMUS). Sprint, though, did announce a multiyear agreement with Altice USA (ATUS) under which the latter entity will sell mobile service on Sprint's network. The M&A reports are pushing the technology stocks higher, particularly those of the semiconductor companies.

Looking ahead to the second half of the session, the bulls look to have a modest advantage, but the major averages have pulled back off of earlier highs, with the Dow turning negative for a brief stretch in the last half hour However, the move to the upside is being led by the broad technology and energy sectors, which augurs well for the bulls being able to stand their ground in the second half of the trading day and deliver another record-setting day for Wall Street. 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.


Before The Bell - The most recent five-day stretch of trading was a bit of a rollercoaster ride, with the major averages seesawing back and forth around breakeven for much of the week. But in the end, it was another productive stretch for those long equities, with the major equity indexes eventually finishing to the upside, on two consecutive mostly winning sessions to end the week.

On Friday, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index advanced 23, 49, and eight point, respectively, with all finishing at record highs. The leadership clearly came from the NASDAQ, which rose on the strength of the technology and healthcare stocks. The gains for the large-cap dominated Dow 30 and S&P 500 Index were more modest, and the small-cap sector finished in the red. Although the headline figures looked to favor the bulls, the overall trading was quite mixed, with the spread between winners and losers on both the New York Stock Exchange and the NASDAQ razor thin, with decliners actually outnumbering advancers on the Big Board. From a sector perspective, there was a mixture of up and down arrows among the top-10 equity groups. As noted, the tech and healthcare sectors were in favor, but the opposite was the case in the basic materials, financial, and telecom areas.

Still, it was another winning week on Wall Street, with stocks again getting a boost from a number of factors. The third-quarter earnings season, which is now in the late stages, has proven supportive for stocks, with the large majority of companies exceeding expectations, particularly on the revenue line, which has often not been the case in recent years. In addition, some encouraging news on the economy last week, including strong reports on manufacturing and nonmanufacturing activity, gave equities a lift. However, Friday’s labor report was again somewhat lackluster, which likely held the market back some on the final day of trading last week. Specifically, the nation added a fewer-than-expected 261,000 jobs in October, and the unemployment rate fell to 4.1%, its lowest level in nearly 17 years. But wage growth was also weaker than pundits expected, with the average hourly wage up 2.4% year over year, a slowdown from September's 2.8% pace.

The job figures did not alter the current expectation that the Federal Reserve, which did not tighten the monetary reins at last week’s FOMC meeting, will raise the federal funds rate by 25 basis points next month. Still, the market is expecting the tightening of the monetary reins to be gradual, which was not altered all that much by President Trump’s nomination of Fed Governor Jerome Powell to lead the central bank next year. He is viewed as a moderate choice and has historically been slightly more dovish with regard to monetary policy than the average member of the Board of Governors.Too, Mr. Powell will likely push to reduce the degree of regulatory authority of the Fed, which was also viewed positively by Wall Street.

Turning to the week at hand, we will still get some notable reports from Corporate America, including the latest quarterly data from Dow-30 component and entertainment giant Walt Disney (DIS - Free Disney Stock Report). On the business beat, the data will be very light after last week’s busy stretch. The lack of economic news and the winding down of the third-quarter earnings season may push the investment community’s attention to Washington D.C. and the bickering over tax reform. How investors will react to such is unknown, but we do know is that the looming tax debate is a fluid situation, which, along with President Trump’s tour of Asia to discuss trade relationships and the North Korea situation, has the potential to move the market.

With less than an hour to go before the commencement of the new trading week stateside, the equity futures are presaging a mixed to slightly positive opening for the U.S. stock market. Overseas, most of the main indexes in Asia finished slightly lower overnight, while the major European bourses are trading modestly in the red as trading moves to the second half of the session on the Continent. Investors should note that the price of U.S. oil rose to its highest level since July 2015 this morning, extending last week’s gains. The news that the Saudi heir to the throne oversaw the arrest of dozens of the country's most powerful princes, military officers, businessmen and government officials this weekend is behind today’s crude price surge. This is seen as a bullish sign for prices, as the crown prince Mohammed bin Salman has been bullish about reining in oil production. 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.