After The Close - The stock market opened nicely higher this morning, and managed to maintain and even build on this momentum through the afternoon. While some news headlines seem worrisome, there have been reports suggesting that the coronavirus, which is largely centered in China, may be able to be contained. Investors seem to be taking an optimistic view toward the crisis, while concentrating on corporate profits here at home. At the close of the session, the Dow Jones Industrial Average was ahead 275 points; the broader S&P 500 Index was up 22 points; and the NASDAQ was higher by 87 points, with all reaching record highs.
Market breadth was supportive, as advancers were ahead of decliners by a roughly two-to-one margin on the NYSE. The technology, services, and basic materials issues displayed leadership, while the utilities and healthcare names lagged the pack.
Meanwhile, it was a light day for economic news reports. However, tomorrow will be quite a bit busier. In fact, initial jobless claims for week of February 8th and the Consumer Price Index (CPI) for the month of January are due to be released. Friday will also be a relatively full day with a few reports due out.
In corporate news, the fourth-quarter earnings season continues to take shape. Today, shares of CVS Health (CVS) put in a soft session, after the company put our respectable results but issued a lackluster outlook. In the technology space, shares of Shopify (SHOP) surged after that company posted a good report. On a related note, shares of Bed Bath & Beyond (BBBY) sank, after the home furnishings retailer warned that it would probably not keep up with expectations for the quarter.
Technically, the stock market continues to advance, as the month of February unfolds. It remains to be seen if the bulls will be able to keep up their buying campaign, once the fourth-quarter earnings season concludes. Also, the health scare in China is not yet over and should be watched, in our view. – 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 stock market put in a choppy and generally up-and-down session yesterday marked by several alternating modest rallies and setbacks. The session started very briefly to the upside, with the Dow Jones Industrial Average climbing by almost 140 points. However, that uptick would prove short-lived, and a descent gradually set in, so that by just after 11:00 AM (EST), the blue chip index had eased into the red. Here, too, that sojourn would not be sustained, and a second round of more modest buying ensued.
Again, alternating buy and sell moves would continue through the afternoon, with the Dow falling to a loss of more than 60 points by 3:00 before a final round of incremental buying ensued and would carry on until near the close. When the dust finally settled, the blue chips would end on a flattish note, while the S&P 500 Index and the NASDAQ would eke out modest final gains.
Breaking the session down, there was some weakness in the tech and entertainment categories, most notably Facebook (FB) on a brokerage house downgrade. On the other hand, some recently battered basic materials issues rebounded nicely during the session, before wilting at the close. Still, such issues ended the day with modest gains. As to the motivation behind the day's action, the basic trends were contentment with the economy balanced out by exacerbating fears about the fast-spreading coronavirus.
Meanwhile, as the virus lingered, Federal Reserve Chair Jerome Powell, in testimony before Congress said that the central bank was closely monitoring the situation as well as its potential impact on the global economy. The Fed Chair suggested that there would, indeed, be some impact, but quantifying it would be highly difficult at this time. Conversely, the economy was pressing modestly ahead, with a fairly well-defined gait.
Looking out to a new day now, and one in which the economy and the coronavirus will likely play notable roles, we see that the U.S. equity market is poised to open the session to the upside. – Harvey S. Katz, CFA