After The Close - After a strong open to Thursday’s session, the major market averages shook off some mid-morning selling pressure and entered the afternoon holding onto modest gains. The rest of the day saw a more-mixed pattern reveal itself, as low volume trading gave way to some selective profit taking amidst a richly valued equity market.
In the afternoon hours, the S&P 500 and tech-laden NASDAQ 100 each moved closer to their respective breakeven lines. The Dow Jones Industrial Average was the most resilient of the large-cap indexes in the latter half of the day, led by two healthcare components, UnitedHealth Group (UNH – Free UnitedHealth Stock Report) and Travelers Companies (TRV – Free Travelers Stock Report). Strength among small-cap equities led to a modest lead by advancing over declining shares by the closing bell. Moderate rallies in the basic materials, energy, and telecommunications sectors were offset by selling of the non-cyclical consumer goods stocks. In the final half hour of the year’s penultimate day of trading, the modestly positive tone accelerated as the closing bell neared.
Meanwhile, oil values rose, though investors appear hesitant to push U.S. crude oil above $60 per-barrel until 2018. There are some undeniably positive undertones here, including a favorable year-ahead import quota released by China. Likely strong demand from the Asia’s superpower has been one of the primary drivers for the commodity markets rally in the second half of 2017. This, coupled with ongoing adherence to OPEC’s drilling accord, and a hopeful decline in U.S. stockpiles ought to help push the per-barrel price higher in the coming weeks and months.
Looking forward, we expect a similarly mixed-to-positive tone to characterize trading on Friday, the final session of 2017. Thereafter, the implementation of the recently passed tax code, its impact on Corporate America, and various geopolitical developments will help determine how the market performs in early 2018. Further monetary policy clarity from the Federal Reserve, which is about to undergo a changing of the guard with Jerome Powell likely to replace Janet Yellen as chairperson, will also be an item worth keeping an eye on in the new year. As ever, stay tuned. – Robert Harrington
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 ho-hum session on Tuesday, to start out the post-Christmas pre-New Year's week, week looked ready to commence an encore yesterday morning. However, this time, there seemed to be a somewhat greater desire to at least tip toe into the buying waters. So, as we ended the first hour of trading, the major large- and small-cap indexes were posting modest gains. End-of-the year buying and selling adjustments were the key factors, as traders put the finishing touches on a simply stellar year for equities.
As for the stock market, the early buying, albeit contained, did persist as the morning proceeded. In fact, the averages perked up somewhat as we moved more deeply into the first half of trading. In all, the formative stage of the session saw a broad, if not deep, upturn, with nine of the ten major equity groups in the black. Ironically, the recently strong energy sector was the lone casualty, if a minor one, while the utility group, a laggard of late, led the way higher with about a half a percentage point advance. Overall, rising stocks led falling issues by about an eight-to-five count as the morning wound down.
Meanwhile, in possible influences on the day's trading, the Conference Board's Consumer Confidence index was issued early in the session, and while it saw another string result, the outcome for December was a little behind the strong November showing. All told, the survey came in with a solid 122.1 score, which trailed the November tally of 128.6. This latter score had represented a 17-year high for that index. The December retreat, according to the Conference Board, "was fueled by a somewhat less optimistic outlook for business and job prospects in the coming months."
Overall, though, this survey denoted persisting strength across the various economic components. And this resilience helped to keep the modest market rally intact throughout the morning. In other news, we saw that signed contracts to buy existing homes crept higher in November, gaining almost one percent from a year earlier. Finally, Treasury yields fell back rather sharply, with the return on the 10-year Treasury notes falling to 2.43%. Also, after hitting a nine-year high, the two-year Treasury note eased back to a yield of 1.91% in early trading.
So, as we entered the afternoon, stocks were holding onto modest gains. That would not change dramatically as we moved through the middle stages of the afternoon. However, as we hit the final hour of trading, a little weakness became apparent, as the Dow's gain, once more than 40 points, was whittled to fewer than 10 points, while the other indexes, once securely in the black, all moved towards the breakeven line. This was in spite of the fact that Treasury yields declined further, with the 10-year note easing back to a return of 2.41%.
The market then turned a little weaker toward the close. However, just as on Tuesday, there was some last-minute buying that enabled the Dow to close up 28 points, while the S&P 500 Index and the NASDAQ to end the session slightly in the black. The smaller indexes, though, continued to languish slightly below the break-even mark. As before, more of the major groups ended higher than lower, while on the NYSE advancing stocks led decliners by a four-to-three count. All, of this on the second slowest trading day of the year as many investors remained ion vacation.
Looking out to the penultimate trading session of 2017, we see that shares in Asia were up in overnight dealings, while in Europe, the Continent's leading bourses are thus far trading a tad lower. Also, of note, oil is ahead by a few pennies a barrel, after slight losses yesterday, while Treasury note yields, which fell in the latest session, are now headed higher so far today. Finally, U.S. stocks are pointing to a positive opening, when trading resumes this morning. – Harvey S. Katz, CFA