Before The Bell - The stock market started unevenly yesterday, as concerns about the Delta variant of the coronavirus were offset by improving optimism about second-quarter earnings results at several large companies. After the initial choppiness, the Dow Jones Industrial Average rose steadily throughout much of the day, while the other indices followed suit higher. Eventually, the Dow, S&P 500, and NASDAQ all reached all-time intraday highs, and the Dow and S&P 500 finished around that level. The NASDAQ hit its high early in the trading session. Overall, the Dow finished up 83 points, the S&P 500 was higher by 11 points, and the NASDAQ increased 4 points.
Moreover, market breadth was rather positive, as advancers outpaced decliners by a 1.3-to-1.0 ratio. Energy stocks were among the best performers, aided by better prices for the related commodities. Meantime, healthcare stocks were among the worst performers.
In commodity news, oil prices were up today, as traders figure that demand will outpace supply. Additionally, management at a few airline companies have stated that there is a shortage of jet fuel at some of the smaller western airports. Moreover, U.S. Treasury bond yields were slightly higher yesterday as traders moved out of the safe-haven asset. The VIX Volatility Index was marginally higher today, as demand for options protection rose.
The futures market started negatively, as traders sold off their positions and reduced risks after the close. Fears about the coronavirus continued to creep up, but the futures recovered to flat levels by around midnight. The futures prices had sunk again by early morning, suggesting a weak start to the trading day.
Looking ahead, the economic calendar is full of reports in the early portion of the day. These include durable goods orders for June, the Case-Shiller home price index, and the consumer confidence index. These should show how well the economy and housing market are faring. Additionally, the U.S. Federal Reserve starts its two-day meeting to determine interest rates. Though the market expects no imminent change, traders will be looking to see what the Fed is thinking about long-term interest rates. Meantime, earnings season will continue in full, with several Dow companies on the docket to release second-quarter results both before the bell and after the close. These include several trillion-dollar market cap tech companies in the afternoon. Overall, we think trading will largely be impacted by economic and earnings reports released today, though investors will keep an eye on the Fed. - John E. Seibert