After The Close - The stock market got off to a weak start this morning, but managed to recover some ground as the session progressed. At the close of trading, the major averages were mixed, with the Dow Jones Industrial Average down 45 points, the broader S&P 500 Index off nominally, and the NASDAQ higher by nearly five points. Market breadth showed an uneven session, too, with decliners just about even with advancers on the NYSE. The major equity sectors were divided, with gains in the financial and technology issues offset by losses in the utility and noncyclical consumer names.
Meanwhile, it was a light day for economic reports. Tomorrow should be a bit busier. Specifically, we will get a look at the latest monthly producer prices, wholesale inventories, and weekly jobless claims.
In the corporate arena, a few widely followed companies weighed in with their results over the past 24 hours. Notably, shares of The Walt Disney Company (DIS – Free Disney Stock Report) retreated after the media giant left Wall Street unimpressed. In contrast, shares of CVS Health Corp. (CVS) forged ahead in response to an upbeat report.
Technically, stocks have been quite resilient lately. Whenever the market weakens, it seems buyers are willing to step in to support equities. For now, traders appear optimistic about the nation’s strong domestic economy and corporate sector, but still somewhat concerned about Washington’s stance on international trade. - 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 stock market, following a string of higher sessions, which has brought the S&P 500 Index up to the cusp of yet another all-time, high, got off to a stellar start yesterday morning, with strong across-the-board early gains. In all, as we moved into the latter part of the morning, we saw the aforementioned S&P 500 climb a dozen points, while the companion Dow Jones Industrial Average added 175 points. Once again, it was optimism over earnings that helped to propel stocks higher. The story, it would seem remains the same, with strong corporate results helping to offset worries about global trade.
Overall, the earnings season has been a good one, with results up by more than 20% in the latest three months, which has easily surpassed expectations for the period. Now, with most of the larger companies having already reported, the focus has shifted to the smaller enterprises. Here, the results are less uniform, and while we have had a number of strong performances, we have also had our share of disappointments. And the market has proven unforgiving. Yesterday was just the latest example. And with so many smaller and less-predictable companies yet to report, we could have even more volatility going forward in the very near term.
As to the market yesterday, as noted, stocks got off to a solid start, with the Dow Jones Industrial Average surging to an early gain of close to 190 points. Things stabilized from there, and as we neared the noon hour in New York, the blue chip composite was still up in the triple digits, albeit down somewhat from its morning best. The other indexes, too, were higher, while nearly all of the top ten sectors were posting gains, led by the basic materials. Moreover, advancing stocks were comfortably ahead of declining issues, at that time, to the tune of about two to one.
This solid showing then continued into the afternoon, with the Dow and the other indexes all remaining close to their session highs as upbeat sentiment about earnings and revenue growth continued to offset concerns about trade conflicts with China. With nothing new on that latter front, stocks were able to continue their ascent. Among the strongest issues in the latest session was Caterpillar (CAT – Free Caterpillar Stock Report), with that Dow component jumping by better than 2%. Going the other way was Weight Watchers (WTW) stock, which tumbled by some 15% during the day. That issue had been among the first half's biggest winners.
This power then persisted into the close, with no new developments on the trade front to rattle investors. The strength was fairly consistent and broad, with the Dow leading the way by a narrow percentage. Also, gaining stocks retained their edge into the close. On an individual basis, shares of electric car maker Tesla (TSLA) jumped after CEO Elon Musk raised the prospect of his taking the high-flying company private at $420 a share. The stock, after a brief trading halt, jumped further closing the day at just under $380 a share, up more than 11% on the day.
In all, the Dow added 127 points; the S&P 500 gained eight points; and the NASDAQ was better by 24 points. It was another constructive day for a stock market that has known little else for much of the summer. Now, looking ahead to a new day, we see that shares in Asia were a tad weaker in overnight trading. In Europe, the leading indexes are showing little early movement. Elsewhere, oil is flat, following gains yesterday; the yield on the 10-year Treasury note, is holding steady at 2.97%; and U.S. futures are pointing to a pedestrian start this morning. – Harvey S. Katz, CFA