Before The Bell - The stock market has certainly been making things interesting over the past month, and that clearly includes this week so far. To recap, stocks fell anew on Monday, even though the Federal Reserve made a major commitment to asset repurchases. Then, on Tuesday, indications out of the Senate that the much-touted $2 trillion fiscal stimulus package was nearing adoption sent the market surging. In all, the Dow Jones Industrial Average jumped 2,113 points on that expectation. The other indexes skyrocketed, as well.
Then, after an agreement was reached in the early hours on Wednesday, and the equity futures seesawed in the pre-market hours, stocks started the latest session nicely to the upside, with the most pronounced strength in the Dow. But that initial upsurge did not last for long, and after 30 minutes or so, the major averages had dipped into the red. However, after that brief respite, the upturn resumed again and with added strength, as stocks surged into and past the noon hour.
Indeed, as we reached 1:00 PM (EDT) in New York, the second bullish romp in two days was on in full force. After that, the equity market would advance still further, with the Dow Industrials passing the 22,000 mark as we hit 2:00 PM. That gain, which would hit 1,300 points made the upturn seem as though it would be the second mammoth affair in two days. But alas, the market would falter badly in the last half hour, with the Dow easing back to a still not-too-shabby gain of 495 points.
Still, that was a major step back. And elsewhere, things were worse, with the S&P 500 adding just 28 points and the NASDAQ actually falling back by 34 points. Among individual issues, United Tech. (UTX) enjoyed its second big win in as many days, while shares of Boeing (BA) surged more than 20%. The performance of the latter is particularly interesting. After its myriad woes, dramatic market plunge, and dividend suspension, the Dow component had fallen to $89 a share. Yesterday, it had jumped to a close of over $158.
So, here we are, as the stock market has posted its first back-to-back win since February and its best two-day showing since 1987. The late selling, meantime, apparently followed a tweet from Sen. Bernie Sanders that the $2 trillion fiscal package could yet hit a few snags. On the other hand, comments by former Federal Reserve Chair Ben Bernanke that this could be a sharp, but short recession with a quick rebound, had helped fuel the earlier strong equity rise.
Finally, as we look ahead to a new day, we see that the futures are pointing to a lower opening when trading resumes later this morning. – Harvey S. Katz, CFA