After The Close - The stock market opened nicely higher earlier this morning, soon reversed course, and finished the session on a mixed-to-positive note. Today marked the last trading session for the month of August, and was also positioned just in front of a three-day holiday. This may explain some of the volatility seen today. At the end of trading, the Dow Jones Industrial Average was ahead 41 points; the broader S&P 500 Index was up two points; but the NASDAQ was lower by 11 points.
Market breadth was mixed, with advancers just about even with decliners on the NYSE. From a sector perspective, the industrials and basic materials issues managed to make progress, while the technology and select consumer names were areas of weakness.
Meanwhile, traders received a few economic news items this morning. Specifically, personal incomes rose 0.1%, while spending rose nicely, during the month of July. These figures were more or less in line with expectations. In addition, the Chicago PMI came in at 50.4 for the month of August, which was a supportive reading. Finally, the University of Michigan, consumer sentiment settled at 89.9 for the month of August, a bit lower than had been expected.
In the corporate arena, shares of Ulta Beauty (ULTA) plunged after the beauty supply retailer posted soft quarterly results and provided a disappointing outlook. Elsewhere, shares of Ambarella (AMBA) jumped in price, after the semiconductor company delivered an upbeat report.
Technically, stocks experienced some volatility during the month of August. Looking ahead to September, investors will be closely following the trade negotiations taking place between the U.S. and China. Some progress on this front would likely help stabilize the market and lift sentiment. - 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 - Stocks shot out of the gate quickly yesterday to begin the penultimate trading session of this week and the month of August after China signaled that it wished to resolve its protracted and ongoing trade war with the United States with a “calm” attitude. This latest turn in the complicated trade dealings came just days after both countries had suggested that they were starting to take a harder line. Of course, we have been here before only to get disappointed when anything but a calm approach would follow. But for one day, at least, the bulls were getting their wish.
On point, the stock market soared from the open, with the Dow Jones Industrial Average quickly jumping more than 300 points. It then would pare that increase to just below 200 points before regaining some momentum as we hit the 90-minute mark of trading. This latest upturn was helping to reverse what had been a weaker August for the market. Meanwhile, not only was the Dow on the upswing, but also the NASDAQ, with that tech-driven composite surging by some 100 points early in the day. Energy shares also were higher, getting a lift from rising oil prices. Higher bond yields were helping, too, as recession fears eased somewhat.
Not all of the news was good, however, as the latest data showed that pending home sales showed a decline of 2.5% in July on a month-to-month basis. They also were off 0.3% from a year earlier. Pending sales are signed contracts to buy existing homes. As such it is a future indicator of closed sales for August and September. This decline came in spite of a further dip in mortgage rates. In other economic news, the U.S. government revised downward from 2.1% to 2.0%, its estimate for second-quarter GDP growth, reflecting weaker state and local government spending, but an upward revision in consumer outlays.
Meanwhile, after that pause, the market resumed its uptrend and as the first half of the session wound down, the Dow was back up by over 300 points and the NASDAQ had crossed the century mark. As had been the case on Wednesday, stocks stormed ahead early and continued to build on those gains following the pickup in trade optimism. Sensitivity to the global situation remains a key driver for the equity market, and we sense that this will be the case as summer ends and fall begins, as the Federal Reserve seems likely to lower interest rates at its mid-September FOMC meeting and we are a ways off from earnings reporting season.
The stock market then would drift into the close, retaining the large gains tallied earlier, but without adding to those increases appreciably. Still, the averages did manage to end matters near their best levels of the day, with the Dow Industrials rising by 326 points. The S&P 500 Index gained 37 points and the NASDAQ jumped 117 points. Gaining stocks also held a formidable lead over declining issues as the two-day comeback has helped the market. Looking ahead to today, we will be getting key data on consumer sentiment from the University of Michigan about 15 minutes after the market opens.
As for the new day, and following the fireworks of the past two sessions, we see that stocks were mostly higher in Asia overnight, while in Europe, the major bourses are showing early gains on increased optimism on trade. Also, oil prices, which were up again yesterday, are down somewhat at this time, while Treasury note yields, which rose yesterday, with the 10-year note climbing to a return of 1.52%, now are at 1.53%. Finally, the U.S equity futures are suggesting a higher opening when trading resumes. - Harvey S. Katz, CFA