Before The Bell - Wall Street, which endured one of its worst weeks in months in the post-Labor-Day span, began the current five-day period on a strong up note on Monday and continued that comeback yesterday morning and into the early afternoon. Solid economic fundamentals and additional gains in the technology space combined to push the stock market nicely higher. In all, the Dow Jones Industrial Average quickly moved out to a gain just north of 235 points within the first few minutes of trading and retained much of that uptick throughout the first half of the session.
However, it was the NASDAQ where the real action was, with streaming giant Netflix (NFLX) and social software behemoth Microsoft (MSFT) leading the way. Stocks also received help from China, which reported its first retail sales increase for this year. On our shores, the market was helped by reassuring data on the industrial front, as the survey issued just before the opening of the trading day showed that U.S. industrial production had increased by 0.4% in August. That was its fourth consecutive increase even though such output was still off notably from the year's high set early in 2020.
Optimism also was built on rising expectation for a vaccine to prevent the coronavirus, with sentiment building that such a preventive could be approved by yearend. Further, Speaker Nancy Pelosi announced that the House would remain in session until the two parties had reached an agreement on another round of emergency coronavirus relief. Meanwhile, after that morning and early afternoon burst of strength by the indexes, the Dow's advance would start to stall as we moved further into the final hours of trading, with the early gains by the blue chips about halved as we moved into the final two and a half hours of trading.
The erosion in the day's advance would continue through the rest of the afternoon, especially in the Dow, with that composite actually falling into minus territory as the day's close approached, with just a nominal amount of late buying allowing the blue chips to end the session at the breakeven point. Things were better for the S&P 500 Index (up 18 points) and for the NASDAQ (ahead 134 points). Helping the market, in addition to the tech gains, were better performances by real estate and consumer discretionary stocks. But the financials ended lower on the day, particularly the big banks.
Meanwhile, in the early aftermarket hours, shares of surface carrier FedEx (FDX) jumped 8%, after posting quarterly results that comfortably beat on the top and bottom lines. In addition, shares of software maker Adobe (ADBE) rose more than 4% after it also reported better-than-expected quarterly results. Conversely, retailer Kohl's (KSS) saw its stock ease a little after announcing that it would cut its corporate headcount by 15% as part of its latest restructuring efforts. As for the market in the after hours, the early evening performance by the futures was lackluster, with small losses indicated.
Looking ahead to the middle session of the trading week, the premarket indications this morning now point to a stronger start to the trading day when activity resumes a little later this morning. – Harvey S. Katz, CFA