After The Chose - Stocks put in a generally constructive session today. At the end of trading, the Dow Jones Industrial Average was ahead roughly 213 points; the broader S&P 500 Index was up 22 points; and the NASDAQ was higher by 50 points. Market breadth was supportive, with advancers comfortably ahead of decliners on the NYSE. All of the major market groups made progress, with solid gains in the consumer and industrial issues. The utilities also made notable strides.
Traders received a few economic reports this morning. Specifically, retail sales rose 0.6% during the month of March, which was a bit better than had been expected. Further, business inventories increased 0.6% for the month of February, which was in line with the consensus view. Tomorrow we will get a look at housing starts for the month of March, as well as the latest monthly industrial production numbers.
In the corporate sector, we heard from a few more large financial corporations today. Specifically, shares of Bank of America (BAC) moved up after the banking giant released respectable results. Shares of Charles Schwab (SCHW) also traded higher after the discount brokerage company delivered an upbeat report.
Technically, the stock market continues to look for direction. Perhaps, the first-quarter reporting season, which just commenced, will provide some much needed clarity. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell - The major U.S. equity indexes recorded their first winning week in more than a month in the most recent five-day stretch of trading on Wall Street. But to say it was easy for the bulls would be incorrect, as two of the five days saw the major averages finish in negative territory, including a difficult conclusion to the week on Friday. Behind the continued volatility on Wall Street are concerns about a trade war brewing between the United States and China and the escalating tensions between the United States and Russia in troubled Middle East hot spot Syria. The United States and its allies launched missile strikes against the Assad regime over the weekend. Those geopolitical concerns, along with uneven economic data of late and a quiet period for earnings, have investors on edge. Still, we saw some bargain hunting last week, as the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index finished the week 1.8%, 1.5%, and 2.0% to the upside, respectively.
On Friday, the major averages started the session to the upside, but were not able to hold those initial gains to the closing bell. For the session, the Dow 30, tech-heavy NASDAQ, and broader S&P 500 Index were 123, 34, and eight points lower, respectively. Overall, declining issues led advancers on both the New York Stock Exchange and the NASDAQ, and the majority of the 10 major equity groups were in the red. Among the top-10 sectors, we saw some rotation out of the economically sensitive groups (i.e., financial, consumer discretionary, and technology) and into the higher-yielding, more-defensive categories. The market remained more focused on the aforementioned geopolitical tensions than on the economy and the start of what is expected to be a highly successful first-quarter reporting season, with the consensus calling for earnings growth in excess of 18% for the S&P 500 companies.
Speaking of earnings, JPMorgan Chase (JPM – Free JPMorgan Chase Stock Report) got the ball rolling on Friday with the release of strong March-period quarterly results. However, shares of the banking giant after starting the session to the upside reversed course and finished in the red for the day. The same fate was suffered by Citigroup (C) and Wells Fargo (WFC), two other banking giants that reported earnings on Friday. With regard to Wells Fargo, the investment community is worried about the possible fines and penalties the bank may face due to their past loan abuses. The earnings season begins to kick into gear this week with reports due from seven Dow-30 companies.
Meantime, investors will get some important data on the economy this week, with reports due on housing starts and industrial production, as well as the Federal Reserve’s latest Beige Book summation of economic conditions on Wednesday afternoon at 2:00 P.M. (EDT). And just moments ago, the Commerce Department reported that retail sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $494.6 billion, an increase of 0.6% from the previous month, and 4.5% above the March 2017 figure. Total sales for the January through March period were up 4.1% from the same period a year ago. On Friday, the market reacted unfavorably to a lower than expected reading on consumer sentiment, with respondents noting concern about the impact of President Trump's trade policies on the economy. Our sense is that this better-than-expected retail sales figure will have the opposite effect on the market today.
With less than an hour to go before the commencement of trading stateside, the equity futures are presaging a higher opening for the U.S. stock market. Investors, after the air strikes in Syria this weekend, are taking some comfort in speculation that there will be no retaliation by Russia to the U.S., French and U.K. airstrikes and missile attacks. The gains in the futures also were extended after the release of the aforementioned retail sales data. Stay tuned. – William G. Ferguson