Before The Bell - The stock market tried for a so-called four-peat yesterday, as the leading averages all started the latest session to the upside, boosted by continued optimism regarding the fast-paced economic reopening across the country. So, within minutes, the Dow Jones Industrial Average, up by better than 500 points on Tuesday, pushed ahead by a notably more modest 100 points yesterday. It then went back and forth during the first half hour, mostly securing modest gains. Then, after that higher start, some profit taking ensued.
There was not much in the way of profit taking, however, and the Dow and the S&P 500 Index went in and out of the green for the rest of the morning, before we saw some renewed firming early in the afternoon. Meanwhile, the NASDAQ continued to press ahead strongly, with nifty gains among some larger tech names, with Apple shares (AAPL), for example, surging to an all-time high above $355. Microsoft (MSFT) also gained nicely over the middle of the trading session.
The market then would trend higher into the first part of the afternoon, with the Dow again approaching session highs as we neared the 2:00 PM (EDT) hour. Then, a gradual descent would get under way and carry into the close, which would leave the blue-chip index with a 170-point closing loss. The S&P 500 would follow a similar path, cresting at session-best levels in mid-afternoon before ending in the red, too. However, the NASDAQ would finish in the green on that tech strength, but would also end well below the best levels of the day.
Meanwhile, the economy once more played a role in the day's action. Readers will recall that on Tuesday, a much stronger-than-expected report on retail spending, helped embolden the bulls, while a more subdued issuance on industrial production and factory utilization partially offset that euphoria. Then, in the latest session, the U.S. Commerce Department reported that housing starts rose in May, but the gain of 4.3% was less than expected. The May number was the second lowest monthly total since 2019.
As to late influences on trading, some suggest that the stock market fell back modestly on concerns that Beijing was making an effort to contain a new coronavirus outbreak linked to the capital's largest meat and vegetable market. This news partially offset word that companies in our country were reporting improving demand and that the Fed remained committed to more monetary support. The continued possibility of an infrastructure bill also was encouraging the bulls.
Finally, as we look out to a new day and after some weakness in the equity futures in evening activity last night, it appears likely that the equity market will open lower this morning. – Harvey S. Katz, CFA