Stock Market Today: September 11, 2013
After The Close - The U.S. stock market put in a somewhat mixed showing today, but still managed to make selective progress. At the close of the session, the Dow Jones Industrial Average finished up 136 points; the broader S&P 500 Index was ahead five points; but the NASDAQ, which lagged the other major averages, ended down four points. Notably, some of the weakness on the NASDAQ was likely due to a sharp decline in Apple (AAPL), as investors were less than enthusiastic about that company’s recent product upgrades.
Overall, market breadth was positive on the Big Board, as advancing stocks outnumbered decliners by a slight margin on the NYSE. However, these figures were less encouraging on the NASDAQ. Market sectors also suggested a mixed tone to the session. There was leadership in the consumer names. The healthcare issues also performed well, thanks to a solid showing in the medical supply stocks. However, the utilities declined a bit. Furthermore, the technology stocks ended lower, with weakness in the computer hardware makers.
Technically, the stock market is firming up. Today’s move put the S&P 500 Index further above its 50-day moving average, located at about 1,670. Further, the NASDAQ, which has been leading for the past several weeks, is still near its 52-week high. Meanwhile, the Dow industrials had been a bit weak, but have made considerable progress over the past three sessions. Given the gains logged over the past week, or so, it would not be unusual for equities to take a breather, as this would give traders a chance to get acclimated to the market’s higher level.
The economic news was light again today. Specifically, wholesale inventories increased 0.1% in July, while they had declined slightly in June. Tomorrow, the employment situation is back in the spotlight, with the release of the weekly and continuing jobless claims.
In the corporate arena, there were a few items worth mentioning. Shares of Coldwater Creek (CWTR) traded sharply lower after the women’s clothing retailer released disappointing top-and bottom-line results. Texas Instruments (TXN) stock slipped a bit too, after that company tempered its outlook.
The stock market may be relieved that the U.S. will likely be putting its military action against Syria on hold, as it pursues diplomatic options. Further, the continued suggestion that China’s economy is in decent condition also cannot be underestimated. -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 - The middle day of the trading week has brought out the profit takers, which is not overly surprising given that the U.S. equity market has been on a nice run over the last six trading days—punctuated by two strong sessions on Wall Street to start this week—and valuations are looking a bit frothy once again. The lack of any major news on either the economic or the earnings beats today appears to have given investors an opportunity to take some selective profits. However, within the last hour of trading, the buyers have been jumping back into the market and the broader S&P 500 Index, initially lower, has rallied to join the Dow Jones Industrial Average, which has shown strength since the commencement of trading, in positive territory. Meantime, the NASDAQ, with weakness in shares of Apple (AAPL) weighing on the tech-heavy average, is still trading lower. Overall, decliners are leading advancers on both the Big Board and the NASDAQ, but even that spread has narrowed in the last hour.
Notwithstanding the recent rally, there is still a slightly bearish tilt to sentiment on Wall Street, but that may be changing. In addition to the NASDAQ’s setback, the small-cap Russell 2000 and the S&P Mid-Cap 400 Index are also in negative territory—but even those indexes are starting to do better. As noted, the Dow Jones Industrial Average, which will undergo a composition change following the conclusion of trading on September 20th, is bucking the downward trend, with more of its component stocks in positive territory than on the negative side. Shares of International Business Machines (IBM – Free IBM Stock Report) Chevron (CVX - Free Chevron Stock Report), United Technologies (UTX - Free United Tech. Stock Report), and Walt Disney (DIS - Free Disney Stock Report) are performing well today.
The lack of any major news on the economic or earnings fronts, did not give investors any additional fodder to push the equity market higher, at least at the outset of trading. If anything, the sparse news may be allowing investors to focus more on the Federal Reserve’s next policy move, which many pundits believe will include some tapering of the central bank’s popular bond-buying program. Historically, market participants have not reacted positively to a tightening of monetary policies.
Meantime, we did get some big news from the technology sector in the last 24 hours. Yesterday technology behemoth Apple unveiled two new versions of its iconic IPhone model. The new upgrades were not greeted positively either here or in China, where Apple is trying to increase its market share. Apple shares are trading notably lower once again today after rising nicely ahead of yesterday technology unveilings. Conversely, shares of IBM are rising after the technology giant announced that Synnex (SNX) plans to acquire its worldwide customer care services business. Synnex shares also responded favorably to the report.
Looking ahead to the second half of the session, it will be interesting to see if the bulls, who have had their way with trading the last week, will step forth again this afternoon. The aforementioned lack of any major news today may make that task a bit more difficult than in recent days, but signs are already suggesting that a second-half rally may be forthcoming. 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.
Stocks to Watch from The Survey – Corporate news is fairly light today. On the earnings front, shares of Coldwater Creek (CWTR) are down sharply ahead of the bell, after the women’s apparel and accessories retailer reported disappointing July-period results. Its outlook didn’t inspire much confidence, either. Elsewhere, telecommunications company Verizon Wireless (VZ – Free Verizon Stock Report) looks set to sell upwards of $49 billion in debt securities to finance its pending purchase of industry peer Vodafone’s (VOD) stake in their Verizon Wireless joint venture. VZ stock is little changed in pre-market trading. – Matthew E. Spencer
Before The Bell - Easing concerns about Syria, at least for the time being, following reports that Damascus has agreed to relinquish its chemicals weapons to the international community helped to keep the vigorous Wall Street rally, which commenced on Monday, alive for another day. All told, the market, which started to the upside, continued to evidence strength over the full session for a second day running. As a result, the Standard and Poor's 500 Index, a 12-point winner in the latest session, has now climbed for six sessions in a row.
As to the individual indexes, the Dow Jones Industrial Average, which will undergo a notable composition change at the close of trading on September 20th, in which three faltering companies will exit that blue chip index, while a trio of higher-priced equities will take their places, gained 128 points, climbing to just shy of the 15,200 mark. The NASDAQ, which has been leading the parade, closed up 23 points, or proportionately less than the Dow. Winning stocks led losers on both the Big Board and the NASDAQ, but by less than two to one on both exchanges. The advance had been much more broadly based on Monday.
The main reason for the market's renewed strength, meanwhile, is the changing perception about the future of the West's response to Syria. Several days ago, it seemed as though the United States was headed toward imminent military action. Now, though, in the wake of an apparent dwindling of support for such action in Congress, and amid reports that Russia will get its ally Syria to give up its chemical weapons, the likelihood of a military strike has been reduced--at least for now. So, with lesser concerns on that front, along with news of a pickup in China's economy, the mood on Wall Street has improved significantly.
Going forward, and assuming that the economic news out later this week on our shores--and we will have the release of data on retail sales, producer prices, and consumer sentiment on Friday--is benign, the stock market should be able to possibly retain its recent gains.
Of course, there is always something to worry about with respect to the stock market, and the next item of note that will be up for debate is the Federal Reserve and the likely outcome of the bank's upcoming FOMC meeting next Tuesday and Wednesday. The consensus now is that the meeting will produce the first tapering of the very popular bond-buying program, which was launched as a way of lowering interest rates in order to underpin faster economic growth. A number of market pundits now suggest that the U.S. economy can stand on its own, and that the central bank could, as a result, see an opening to start taking baby steps along the line of less assistance in the months to come. We shall have our answer by next Wednesday afternoon.
Also of note, President Obama indicated last night that he was going to pursue a diplomatic solution to the vexing issue regarding Syria and chemical weapons, preferring to have Congress postpone a vote on a resolution to authorize military force, while we give a chance for the aforementioned diplomacy to work. As things stand now, that authorization is unlikely to be granted. With the threat of a military strike reduced, markets around the world have rallied. Overnight and this morning, however, the bourses have shown just incremental change, as the world waits to see what will transpire on the diplomatic front.
Meanwhile, there was little news of note coming out on the economy overnight, and data will be scarce today on our shores, so the focus may well shift back to the Fed, which will meet next week. As to our markets, there is just modest movement so far in the futures, and that action is to the downside, suggesting that we could get a small dose of profit taking at the opening of the trading day in less than an hour from now. One bright note is that bond yields, which had ticked up a bit yesterday, have eased slightly this morning, with the yield on the benchmark 10-year Treasury note back down to 2.93%. – Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.