After The Close - The stock market got off to a weak start this morning, meandered around for much of the afternoon, and ultimately closed on a soft note. Concerns that the long-awaited trade deal between the U.S. and China might be delayed probably put a damper on sentiment. At the end of the session, the Dow Jones Industrial Average was at the breakeven mark; the broader S&P 500 Index was ahead two points; and the NASDAQ was lower by 24 points. Market breadth was slightly negative today, with decliners just ahead of advancers on the NYSE. From a sector perspective, the healthcare and consumer names pressed ahead, while the basic materials issues lost ground.
Meanwhile, in economic news, productivity declined 0.3% during the third quarter, according to the preliminary reading; analysts had been looking for a modest increase. Tomorrow, will be a light day for economic reports. However, the latest weekly initial jobless claims will be reported.
In the corporate arena, the third-quarter earnings season is still in progress. Many of the large names have reported, but there are still plenty of issuances due out, particularly from the mid-and-small cap companies. Today, shares of CVS Health (CVS) edged up, after that company posted a solid report and increased guidance. On a related note, shares of Humana (HUM) also rose, in response to a favorable issuance. Looking ahead, tomorrow The Walt Disney Company (DIS – Free Walt Disney Stock Report) weighs in with its numbers.
Technically, the market has been holding up well. However, some fatigue seems to be setting in lately. Looking ahead, much will depend on the Administration’s ability to secure a trade deal with China in a timely fashion. In fact, some of the recent stock market gains may have been based on that assumption. – 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 strong early November stock market rally, which has been driven by encouraging economic metrics, solid earnings, and rising optimism that at least a short-term trade arrangement can be hammered out between China and the United States paused a little yesterday morning, after impressive gains this past Friday and Monday. There was no widespread selling, to be sure, but there was a token decline in the S&P 500 and the NASDAQ very early in the session. However, these deficits were largely overcome by late in the morning with the Dow Jones Industrial Average and the NASDAQ rising to all-time highs once more.
Regarding the United States and China have, according to some, reached some agreement in principle on a Phase One accord. But China said firmer commitments on lifting tariffs are needed before that nation pays a visit to the United States. In the meantime, the nation continues to get better-than-expected economic data. On point, after reassuring releases late last week on employment and manufacturing, where the respective slowdowns are now less than feared, the country received a rather favorable report on non-manufacturing activity yesterday morning.
As to the non-manufacturing survey, the report came in at 54.7 for October. That was up from 52.6 in September and expectations of 53.5. This was a clearly upbeat showing and included improvement in new orders, employment and supplier deliveries. However, backlogs took a nasty turn downward. Exports also slowed. Overall, though, the data were better than forecast and is consistent with a business expansion that continues to press forward, if somewhat gingerly. That solid data likely helped the market to stiffen its resolve as we headed toward the noon hour in New York.
In all, the Dow was still ahead 25 points as the morning ended, while the NASDAQ was a handful of points to the good. However, the S&P 500 was off about that much in a bifurcated market. The averages then started to strengthen modestly further as the afternoon rolled along. In fact, as we approached the final two hours of trading, the Dow was up by almost 100 points, while the S&P 500 had about erased its early deficit. The advance would persist as we moved into the final hour, although the near 100-point mid-session gain could not be sustained in the final stages.
As the session concluded, the gains for the day eased somewhat. In sum, the Dow ended up 31 points, but secured a record in the process. The S&P 500, under nominal pressure all day, eased by four points. And the NASDSQ ended virtually unchanged. Bond yields stepped up, though, with the yield on the 10-yeat Treasury note climbing to 1.87% on the better non-manufacturing data. In all, it was a modestly reassuring day, as the nifty gains rallied the past few sessions were sustained, even as further records were not secured without effort.
Looking out at a new day now, we see that stocks were mixed in Asia overnight, while in Europe, the leading bourses are moving in choppy fashion. Also, oil prices are easing on a big crude build and Treasury note yields are down modestly this morning. Finally, U.S. equity futures are pointing to early slight gains as a new trading day approaches. - Harvey S. Katz, CFA