After the Close - The stock market got off to a weak start this morning, but managed to reverse course, and advanced in the afternoon. (Investors should note that the markets closed early today in advance of the upcoming July 4th holiday). At the end of the session, the Dow Jones Industrial Average was up 56 points (0.4%); the broader S&P 500 Index advanced one point (0.1%); and the tech-heavy NASDAQ tacked on 10 points (0.3%). Nonetheless, the session was not as strong as it might appear at first look. For instance, declining issues actually outnumbered advancers on the NYSE. Moreover, the market sectors were largely mixed. There was leadership in the technology area, which is always good to see. Some of the consumer names also did well. However, the financial stocks and the utilities were quite weak.
Technically, the S&P 500 Index has so far not been able to close above its 50-day moving average located at 1,624. This area has presented some resistance on a few occasions lately, which is worth noting. Meanwhile, trading volumes have been light lately, especially on days when the market has advanced and that is also of some concern. Consequently, it remains to be seen if the rally that started about a week ago has real staying power, or if there might be some further consolidation still to come.
The markets in the U.S. once again shrugged off a weak showing overseas. Notably, in Asia the major markets headed lower on discouraging economic news out of China. Also, in Europe the major bourses logged sharp losses on news of some resignations in Portugal’s government. This may be rekindling fears about financial problems in the region.
On our shores, the economic news offered some support to the markets. According to ADP 188,000 jobs were added to the private sector in June, which was quite a bit better than had been widely expected. Also, initial jobless claims for the week ended June 29th came in at 343,000, which was slightly lower than had been anticipated. This may have traders hoping that the June employment report due out Friday morning will be encouraging. On a less positive note, the nation’s trade gap widened in May, and the ISM’s Non-Manufacturing Index for the month of June was a bit weak. - Adam Rosner
At the time of this article’s writing the author did not have positions in any of the companies mentioned.
Stocks to Watch from The Survey – Corporate news is rather light this morning, ahead of today’s abbreviated trading session before the July 4th holiday. Still, there are a few equitites that investors may want to keep an eye on. Healthcare stocks will likely be in the spotlight today, after the Obama Administration announced that it will not enforce a key provision of the Affordable Care Act, which requires large employers to provide health insurance for employees, until 2015 (the rule was set to go into effect in 2014). Shares of health insurers Cigna (CI), Aetna (AET), and UnitedHealth Group (UNH – Free UnitedHealth Stock Report) are all down modestly in the premarket, as a result.
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 opening to the second half stock market lasted just a little more than a session and a half. That is because after equities moved up nicely on Monday, to begin the final six months of 2013, and continued their advance through the morning and the first part of the afternoon yesterday, the sellers entered the fray. And by the closing bell, the key averages were modestly in the minus column. True, the worst of the latest decline was erased during the final few minutes of the trading day, after the Dow Jones Industrial Average had earlier fallen by some 105 points. That setback, which reversed an early session advance in that blue chip composite of some 75 points, made for a round trip peak-to-trough ride in the Dow of almost 180 points.
The other averages followed suit, giving back some once-healthy gains, but coming back from some steeper subsequent losses, to end the day just nominally lower. Also, losing stocks led winners on the Big Board to the tune of a three-to-one ratio, while there was a near standoff on the NASDAQ, which did somewhat better than the Dow on the whole.
For once, though, it was not fears about the Federal Reserve and its presumptive upcoming slowdown in asset purchases that led to the latest round of worries on Wall Street. Rather, it was a case of happenings off shore that told the tale of the tape. Specifically, there is once again fear of slowing economic growth in China that is sending shudders through the markets, and likely was behind much of the losses in Asia overnight and in Europe this morning. The drop in Asia, as noted, seemed to be driven by data showing that growth in China's services sector had sagged to its slowest pace in nine months. It should be noted that the next report from the services sector in the United States will be issued at 10:00 (EDT) this morning.
Then, there is Europe, where the bourses are reacting, as they did yesterday, to the latest concerns about the economic situation in Greece and, more ominously, about the political outlook in Portugal, where the past two days have seen two high-profile government resignations, which threaten to plunge that debt-encumbered nation into a new political crisis.
Beyond the difficulties across parts of the euro zone and China, there is the unsettled political situation in Egypt, which threatens the stability of the already fractious Middle East. The turmoil in that nation has caused oil prices to spike upward, with a barrel of crude now passing hands on the New York Mercantile Exchange at just over $100.
However, not all of the news is unsettling as we peer out to a new day on Wall Street, as the employment outlook is showing signs of brightening, with data out this morning by payroll services provider Automatic Data Processing (ADP) noting that the private sector had created 188,000 jobs in June. That figure easily topped the revised May tally of 134,000 jobs and the consensus forecast for June of 160,000 positions. Also just out, the Labor Department has reported that first-time jobless claims fell to 343,000 in the latest seven-day period, which was below both the consensus (345,000) estimate and the prior week's tally of 348,000.
Thus, it is a mixed bag of news, with the better jobs data helping to pare some steep earlier losses in the U.S. equity futures, which, however, still point to a modest setback when trading commences in New York in about a half hour from now.
Finally, we wish all of our readers a happy, healthy, and safe July 4th, as our nation celebrates the 237th anniversary of its independence. - Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.