Before the Bell: After entering March like a lion, with a better-than-600-point surge in the Dow Jones Industrial Average on Monday, things quieted down to a more lamb-like performance yesterday. Bond yields stabilized and there was little of note on the economic front. So, stocks mainly drifted lower, with more early weakness in the NASDAQ than on either the Dow or the S&P 500. Stocks then closed on a major down note. Looking out to today, we will be getting news from the services sector later on, while the futures seem set to open sharply higher.
Yesterday, meantime, there was early choppiness, with the blue chips alternating between gains and losses during the first hour of trading before heading decidedly lower late in the morning before firing up again as the afternoon got under way. Things were less upbeat on the tech-heavy NASDAQ, where stocks moved sharply into the red early in the day and could never fully recover. Weakness in some high-profile tech names including Apple Inc. (AAPL) and Tesla (TSLA) led the way lower.
This unprepossessing session followed what had been the best day for stocks since last June. Helping the early week rally were good economic metrics, including solid data on construction spending and a compelling reading on manufacturing activity from the Institute for Supply Management. That same ISM will issue its monthly survey on non-manufacturing activity, or the services sector, later this morning. As for the market, it was helped yesterday as Treasury note and bond yields eased somewhat following a mixed showing on Monday.
In other news, the stock market continued to get support from the approval by the FDA early this week of Johnson & Johnson's (JNJ) one shot vaccine. Although that key entrant (the third approved vaccine) was somewhat less effective than the earlier approved preventives, it has the advantage of calling for just one dose. Meantime, on the earnings front, retailer Target (TGT) released upbeat quarterly earnings, but that issue fell in trading after it retracted earnings guidance moving forward.
Regarding late action on Wall Street yesterday, stocks sold off into the close, so that after the Dow had edged back into the green in mid-afternoon, that composite headed straight down the last hour to close off 144 points. Things were much worse on the NASDAQ, where that composite plunged by 230 points, or 1.8% on weakness in the tech sector. As for news this week and in addition to the ISM services sector reading today, we will weekly jobless filing and factory orders tomorrow and the monthly employment report and the trade balance on Friday. – Harvey S. Katz, CFA