After The Close - Stocks made further progress today, as traders extended yesterday’s gains. At the end of the session, the Dow Jones Industrial Average was ahead roughly 84 points; the broader S&P 500 Index was up five points; and the NASDAQ was higher by 15 points. Market breadth was favorable, with winners slightly ahead of losers on the NYSE. Most equity sectors managed to make progress, with notable strength in the technology, energy, and basic materials issues. In contrast, the high-yielding utilities and healthcare names underperformed the broader market.
Meanwhile, it was a light day for economic news. However, based on the available numbers, auto and truck sales picked up during the month of September. This was positive news, given that adverse weather conditions and hurricanes in parts of the country have presented challenges lately. The nation’s employment situation will take center stage over the next few days. Tomorrow, Automatic Data Processing (ADP) will release its employment change report for the month of September. On Thursday, we will get a look at the latest weekly unemployment claims. Then, on Friday, the government will weigh in with the September nonfarm payroll numbers.
Finally, a small batch of corporations delivered financial reports over the past 24 hours. Specifically, shares of Paychex (PAYX) advanced today, as investors seemed pleased with the payroll processor’s latest issuance. In addition, shares of Lennar (LEN) strengthened after the homebuilder delivered a solid report. No doubt, the pace of corporate reports will be picking up soon, as the third-quarter earnings season commences.
Technically, the bulls have demonstrated that they remain in control of the market. However, with price-to-earnings multiples elevated, traders will likely want to see some progress being made on the corporate, economic, and political fronts. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
12:20 PM EDT - In an extension of yesterday’s strong showing, Wall Street began the day solidly to the upside, with the major averages hitting new intraday highs early on. However, trading became mixed as the session wore on, with weakness in the smaller-cap indexes.
A good part of the upbeat mood likely stems from continued enthusiasm over the Trump Administration’s tax reform proposals, and the boon that it could mean for Corporate America, Today’s positive news included strong September sales numbers from the auto makers, including Ford, GM, and Toyota. Those figures were somewhat skewed by discounts ahead of 2018 model-year launches and replacement demand in the wake of the recent damaging hurricanes in Texas and Florida. But those factors will likely continue to boost numbers in October and November, as well. Elsewhere, the National Retail Federation announced that it looked for holiday retail sales (November to December) to rise as much as 4% over last year’s figures.
At the noon hour of trading in New York, the Dow Jones Industrial Average is up 77 points after a fairly steady climb, right around its peak for session and poised for a potential a fourth straight up day. The broader S&P has had a choppier ride, however, but has rebounded to show a gain of two points. Meanwhile, the tech-heavy NASDAQ has also had its ups and downs. After hitting an intraday record, it briefly dipped into the red, but it has since bounced back to four points above breakeven. Taking a look at the major market sectors, most are in the plus column, led by telecommunications and basic materials stocks. On the other side of the ledger, utilities and healthcare names were decliners, each in the red by about a quarter percent, along with the S&P Mid-Cap 400 and the small-cap Russell 2000.
Turning to the European bourses, traders there were also in an apparent upbeat mood today, with most of the key indexes spending all of the day’s session in the green. As the closing bell approached, Germany’s DAX had the best showing, rising over half a percentage point. However, France’s CAC-40 and Britain’s FTSE 100 were not far behind, each up about one-third of a percent for the day. – Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before The Bell - The stock market, which followed a solid first half of 2017 with a reasonably good third quarter, began the final period in strong fashion. In all, the Dow Jones Industrial Average, fresh off an eight-quarter winning streak, headed nicely higher out of the gate, with an early 80-point advance. The tech-laden NASDAQ, which like the Dow and the S&P 500 Index, likewise acquitted itself quite well in the July-through-September span, gaining more than 5%, also jumped ahead, picking up more than 30 points early on. All three indexes rose to record highs in the process.
Partially behind this initial upturn, which persisted throughout the morning, was optimism that the Administration and its governing majority in the House and Senate would be able to pass its tax reform package. Among other things, this package contains the proposal to reduce the corporate income tax rate from 35% to 20%, making it immensely popular on Wall Street. In addition, the Street was emboldened by the morning's release of a survey showing that manufacturing activity had strengthened again in September, rising to a reading of 60.8.
The lone down note, tragically, was the mass shooting in Las Vegas on Sunday night, which although it did not have a direct widespread impact on the stock market, it did put pressure on the gaming stocks, as the shooting took place at a major hotel in the Nevada city. Also, of note, investors were focusing on the pending release over the next couple of weeks, of third-quarter earnings. To this point, expectations are supportive, with estimates for an overall gain of more than 4%.
As we reached the noon hour in New York, the Dow was holding near the session's high, but the NASDAQ's rise, which as noted had hit some 30 points, was pared back notably, to fewer than five points, on slippage in the technology stocks. Still, the advance appeared in reasonably good shape as the afternoon began. Then as the afternoon began, the NASDAQ briefly slipped back into the red, before resuming a modest upturn as the afternoon progressed. But the Dow, which was leading the way all the while strengthened further.
The blue chip composite would add to its gains as the afternoon progressed, buoyed by the strong manufacturing survey, with that index, put out by the Institute for Supply Management, reaching its highest point since 2004, with a reading of 60.8. Strength in the industrial sector often is seen as bullish for corporate earnings, which, as noted, will be out en masse in the next few weeks. This bifurcated market rally continued, with the Dow climbing further and the NASDAQ stating just narrowly positive, as several high-profile tech stalwarts fell on the day.
As the final moments settled in, the Dow rose a bit more, topping the 150-point gain mark at the close, while the NASDAQ, in spite of slippage in some tech names, held higher by almost 21 points. Gains also were tallied by the S&P 500 Index and the small-cap Russell 2000. Among the groups prospering were the health care stocks, with erstwhile laggards, such as TEVA Pharmaceuticals (TEVA), rising about some 5%. At the other end of the spectrum were the casino stocks, which faltered through much of the day following the tragic mass shooting, as did oil.
Looking ahead, the new day now is seeing gains across most of Asia, while the early action in Europe is positive, as well. In other markets, oil is down after losses yesterday; gold is off slightly in early trading; and interest rates are rising once again, with the return on the 10-year Treasury note up to 2.36%. Finally, following a strong start to the fourth quarter and ahead of this Friday's all-important jobs report, the futures are trending modestly higher at this early hour. - Harvey S. Katz, CFA