After The Close - The major U.S. stock indexes started the day with sizable gains and held firmly to positive territory throughout the trading session.
Earnings season got off to a good start, with JPMorgan Chase (JPM – Free JPMorgan Stock Report) and Wells Fargo & Co. (WFC) announcing better-than-expected results for the first quarter. The news lifted shares of Citigroup (C) and Goldman Sachs (GS – Free Goldman Stock Report), both of which are scheduled to report earnings on Monday. The markets were also encouraged by news that China’s exports in March were up sharply versus the year before, suggesting that the recent slowdown in the world’s second-largest economy may have turned the corner. Meanwhile, although industrial output in the euro zone continues to slump, February’s readings were not as bad as some had feared.
When all was said and done, the Dow Jones Industrial Average closed the session with a gain of 269 points, or just over 1.0%. A good part of this was fueled by a sizable jump in shares of Walt Disney (DIS – Free Disney Stock Report) after the company announced it was offering a new video-streaming service. Meanwhile, the broader S&P 500 was up 19 points for the day, while the tech-heavy NASDAQ ended up by 37 points.
Most of the 10 major market sectors put in a good showing, with the biggest gains coming from financials, consumer cyclicals, and industrials, all advancing a full percentage point. The only declining sectors were healthcare, which lost about one percent, and energy stocks, which ended just below breakeven. Altogether, advancing issues led decliners by a wide margin on the New York Stock Exchange.
Elsewhere, oil prices also advanced, with light sweet crude gaining about one-third of a percentage point, to about $64 a barrel. Over the past month, the commodity is up more than 11%, but still about 5% lower than it was a year ago. Lastly, investor sentiment was also positive on the key European bourses, with the U.K.’s FTSE 100, Germany’s DAX, and France’s CAC 40 all ending the session solidly in the green. - Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before The Bell - Buying in the pre-market equity futures and some early supportive trends in Europe helped to get our stock market off on a positive note yesterday morning. That early gain came after an encouraging session on Wednesday, when most stock groups rose in value. However, after that early burst of buying, which was modest, and mostly concentrated in the Dow Jones Industrial Average, the equity market settled in with some mid-session losses, with the declines mostly beginning in late morning. In all, as the afternoon got under way, the Dow was off some 50 points and the NASDAQ was lower by 15 points.
This downturn came ahead of the start of quarterly earnings season, which is now under way with a succession of reports from the nation's leading banking institutions today. The early gains came after additional hints of progress in trade talks between the United States and China. But no timetable was set for the actual inking of a trade deal between the two countries. Also helping the market was news that the European Union had extended, until October 31st, the deadline for a Brexit deal to be consummated. But for one day and least, and likely beyond that, the focus was on earnings, and stocks faltered at midday, as a result.
The market then drifted lower as the afternoon progressed, so that as we entered the final 90 minutes of the trading session, the Dow had fallen to a loss of some 85 points. The red ink would be seen across the board at that point, but was most pronounced in the large-cap arena. Among individual issues, weight-loss provider, Weight Watchers (WTW) had fallen by more than 10% on the day in the late afternoon, and for the year to date was off almost 50%, compared with a roughly 15% advance for the S&P 500 Index during that span. Weight Watchers stock was hit by a lowered price target forecast from a brokerage house.
Earnings, in general, remained the key driver for the market on the session, with steelmaking giant U.S. Steel (X) shares off more than 3% in dealings some two weeks ahead of its release on a bearish recommendation on the stock. Just as the preceding session had a bullish tilt to it, this one was a day for the bears, but only at that juncture. The absence of some conformation that a trade deal was at hand with China also weighed on stocks, as did several downgrades and profit warnings. Overall, expectations are that earnings will end up lower for the first quarter.
The market would then attempt to pare its losses as we headed down the homestretch, and did so with success, as the Dow's loss, once more than 90 points, eased back to a deficit of just 14 points. Moreover, the S&P 500 was about flat, while the NASDAQ ended off 17 points. Losses in some health care issues were notable, while the energy group suffered as well. This latter weakness was attributable, we sense, to a pullback in oil prices. Elsewhere, Treasury yields rose, with the 10-year note climbing past 2.50%, as investors shied away from safety.
Looking ahead to the week's final session, we see that stocks were mostly higher in Asia overnight; in Europe, the leading bourses are also gaining ground so far this morning. Also, Treasury note yields are climbing and oil prices are up rather sharply. And on a day in which earnings will be a major theme, as some of the big banks report their metrics, and we get a critical consumer sentiment survey a little later from the University of Michigan, the U.S. equity futures are poised to open the session with strong gains. – Harvey S. Katz, CFA