After The Close - The futures markets started out lower, as profit taking following the largest one-day point rally of all time occurred the day before. Economic data regarding consumer confidence caused concern about the health of the economy, hurting sentiment and triggering a fall in the indices before the session was too old. The Dow Jones Industrial Average opened around 250 points lower, while the S&P 500 fell by about 25 points. Early morning trading remained choppy, but largely directionless. But in the early afternoon, the market trended even lower. The Dow fell by as many as 611 points at its weakest point. Still, the indices reversed course in the final portion of the day, hitting daily highs and filling the opening gap. All told, the Dow wound up 260 points higher, and the S&P 500 was up by 21 points.

However, declining issues still outpaced advancers today, as most of the move higher was concentrated in a few names. Additionally, materials stocks were among the strongest performers of the day, while real estate-related equities underperformed the broader market.

In commodity news, crude oil prices fell around 2% from yesterday’s large rebound. In addition, precious metals prices rose, due to higher economic uncertainty, while U.S. Treasury bond yields fell in a flight to safety. Additionally, the VIX Volatility Index rose, as demand for option protection increased.

On the economic front, initial jobless claims of 216,000 were lower than expected, suggesting that the labor markets remain strong, even with the recent uncertainty. However, consumer confidence fell to a five-month low. This has been a recent strong point in the economy, helping to drive retail sales higher. But this figure implies that this arena is starting to weaken some. Oil inventories continued to draw down, though this did not help prices today. Meantime, new-home sales were not released due to the government shutdown.

Looking ahead, tomorrow’s economic slate is empty as no major events are scheduled to be released. In addition, the earnings front is quiet, suggesting that tomorrow’s trading will be largely guided by changes in sentiment. - John E. Seibert III

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


11:20 AM EST - Two days after the Dow Jones Industrial Average fell 653 points and a day after the biggest one-day point surge in that blue-chip composite, the market is selling off again.

Concerns about a further deterioration in our trade relations with China, a weaker reading in consumer confidence, and the ongoing government shutdown that some surmise could last into next year are seemingly behind the latest downward adjustment in the market.

In all, as we reach the 90-minute mark of trading, the Dow is off 400 points (after having plunged by more than 500 points earlier); the S&P 500 Index is lower by 42 points; and the tech-heavy NASDAQ is down by 130 points.  

All that is seemingly keeping the bears even remotely at bay are assurances out of the White House that the jobs of the Federal Reserve Chair and the Treasury Secretary are secure at this time.  - Harvey S. Katz, CFA

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, after suffering its worst Christmas Eve session ever, coming off of its poorest week since the bear market days of 2008, and now in the midst of its worst December since the Great Depression, started out the post-Christmas Day session nicely to the upside, quickly gaining some 280 points in the Dow Jones Industrial Average. In the process, the oversold Dow moved up past 22,000 again. But this quick comeback would prove a brief affair--at least initially--with the gains in the Dow and the other indexes almost fully reversing course after the first half hour, or so, of trading.

Then, after this failed attempt at stability, the Dow would edge into the red shortly after the first half hour of trading. The market, which had plunged on Monday after the Treasury Secretary had held calls with the CEOs of major U.S. banks over the past weekend in an effort to shore up confidence that the banking system, would try to turn things around yesterday. But that effort would largely falter for a time. It seems as though the aforementioned move by the Treasury head, while aimed at calming things down, actually led to confusion among market pundits helping to create the uncertain backdrop on Monday.        

Thereafter, the stock market sought to stabilize once again, as the Dow would soon join the other indexes back in the black. The upturn would then strengthen as we neared the noon hour in New York, with the Dow once more securing a low triple-digit gain, but holding short of the early morning levels until near noon. In truth, the stock market is deeply oversold, with traders having dumped equities at will over the past few weeks. So, Wall Street was due for a pop, and that is just what it had received yesterday morning. And, in fact, the buying would continue as the noon hour arrived, with the Dow surging to a gain past 350 points.

The buying then would continue into the afternoon, with the Dow at one point, just as we moved into the final two trading hours, posting an advance of better than 600 points, thereby almost matching the blue chip composite's setback on Monday. Comments from an aide that the President was not contemplating the replacement of Federal Reserve Chair Jerome Powell seemed to calm the market somewhat. All the while, this impressive rally was taking place even as the government remained in a partial shutdown, with no apparent end in sight as both sides were still far apart on the funding for the border wall.

Encouragingly for those bulls remaining, there would be no late-day pullback, with the Dow's advance pressing up to the 700-point mark as we moved into the final hour of trading. Things would then strengthen from there, with the Dow climbing to a gain of nearly 1,000 points as we entered the final 15 minutes of the dramatic trading day. Advances were all around, with nary a bear in sight as the stock market rebounded from its worst setback in years. The buying, it would seem, would feed on itself, sending the market ever higher in a buying frenzy into the close.

At the close, the day would see the Dow add an eye-catching 1,086 points, its biggest one-day advance ever; the S&P 500 would surge by 117 points; and the NASDAQ, led by some high-flying technology stocks, would add 361 points for the biggest percentage gain. All told, each of the ten sectors advanced on the day, led by technology, with a rise of better than 5%, with similar-sized increases in energy and consumer cyclical stocks. Breaking things down further, the Big Board would claim a five-to-one plurality of advancing over declining stocks in a mostly wire-to-wire surge of major proportions.  

Now, the challenge will be to sustain this sudden breakout to the upside. On that count, we see that shares were mixed in Asia overnight, while in Europe, the leading bourses are tracking downward, for the most part, at this hour. Elsewhere, oil prices, up sharply yesterday, leading to a furious rally in the energy stocks, are now easing back again in early morning dealings. Moreover, Treasury note yields, up solidly yesterday in some bottom fishing, now are edging a little lower in early day trading. Finally, seeking an encore from yesterday fireworks, the U.S. equity futures are not cooperating, as they are heading lower at this hour, suggesting a weaker opening when trading resumes later this morning. - Harvey S. Katz, CFA

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