After The Close - The stock market opened higher this morning, maintained its gains through most of the afternoon, but eased a bit in the final hour of trading. At the end of the day, the Dow Jones Industrial Average was ahead 127 points; the S&P 500 Index was up eight points; and the NASDAQ was higher 24 points. Market breadth was favorable, with winners ahead of losers on the NYSE. The energy sector provided leadership, with the price of crude oil moving closer to the $70-a-barrel mark. Some consumer names also made constructive contributions. In contrast, the utility issues fell out of favor with traders who were deploying capital into more exciting market sectors.
Meanwhile, there were few notable economic news items reported today. Tomorrow will be a light day for news, as well. However, the pace should pick up on Thursday, as the producer price index, a wholesale inventory report, and the latest weekly jobless claims will be released.
In the corporate space, we heard from several companies over the past 24 hours. Notably, shares of Zillow Group (Z) and Dentsply Sirona (XRAY) declined in response to weaker-than-anticipated reports. Meanwhile, Tesla (TSLA) made some large price moves driven by M&A speculation.
Technically, stocks have been marching higher since April. The S&P 500 Index is close to its all-time high, located near the 2,870 level. However, it remains to be seen if stocks can move further without some consolidation. - 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 - Wall Street sauntered into a new week with a lot on its mind, but after initially falling back in orderly trading, the equity market righted itself to a large degree within the first 90 minutes of the session. As to influences in this first full week of August, there is the economy, earnings, the Federal Reserve and interest rates, and global trade issues. Let's look at these one by one (see below). Meantime, after the Dow Jones Industrial Average fell by some 80 points early on, it managed to erase most of that loss shortly into the session.
As to these issues, the economy, surged by 4.1% in the second quarter and, a more recent report signaled that employment is still pressing ahead, if more slowly. A similar pattern is evolving in the manufacturing and the nonmanufacturing sectors. This all would suggest that growth could average about 3% in the current half, still a solid pace of improvement. Meantime, earnings are coming in even better than forecasted. Thus, after expecting gains of 20% in the second quarter, growth has been in the area of 24%.
On the other hand, trade concerns continue to proliferate, mostly against China, but also with Canada and Europe. This standoff is characterized by threats of new tariffs and counter threats. All of these are rattling investors at this time. Finally, there is the Fed and interest rates. Although the lead bank held the line on raising interest rates at last week's FOMC meeting, the general consensus is that we have two more rate hikes coming this year.
So, that is where we are now, and where this market stood as we neared the noon hour in New York yesterday, with the Dow off grudgingly and the S&P 500 Index, the NASDAQ, and the small-cap Russell 2000 in the plus column, as gaining issues continued to hold a solid lead over declining stocks. All of this suggested at the time, that the session would conclude as a win for the bulls, who recently have had more victories than defeats, principally on the powerful profit results that are proving a hard act to top.
The stock market would then firm up as the afternoon got under way and shortly after 1:00 (EDT), the Dow would race ahead to a near 70-point gain, while a formidable advance would be seen by the tech-heavy NASDAQ. Then, after some mild mid-afternoon backtracking, in which the Dow's gain was just about given back, the bulls returned to the fray and the solid upturn continued. As before, gaining stocks led the way, as the market was able to once more overcome ongoing trade jitters. As before strong earnings were the catalysts.
This positive tone then would continue into the close, with the leading averages, led by the technology sticks, in general, and by Facebook (FB) in particular. All told, in spite of occasionally backing and filling, the Dow would close out the day up by 40 points. Gains of 10 point and 48 points, respectively, would be tallied by the S&P 500 Index and the NASDAQ. Also, the small-cap weighted Russell 2000 would pick up 11 points, as more stocks would rise than fall on the Big Board. It was a solid day to start a new week.
Looking ahead to a new day now, we will have little of note on the economic calendar, so the focus will again be on earnings, where a number of companies will be releasing their metrics. As for the economy, the week will end with data on producer and consumer prices. In the meantime, stocks in Asia were generally higher in overnight dealings, while in Europe, the leading bourses are now gaining ground. Elsewhere, oil prices are up and yields on Treasury notes are climbing slightly. Finally, U.S. equity futures are showing early strength. – Harvey S. Katz, CFA