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After The Close - The stock market put in a mixed performance today, as we headed into a new week on Wall Street. At the close of trading, the Dow Jones Industrial Average was ahead 58 points; the broader S&P 500 Index was off a few points; and the NASDAQ was lower by 72 points. Market breadth showed a divided session, as winners were about even with losers on the NYSE. Nonetheless, many of the major equity sectors managed to make some progress. Of note, the consumer and financial issues pressed ahead, while the technology and healthcare names retreated.

There was limited economic news today. Of note, factory orders declined 0.1% during the month of October. However, this reading was bit better than had been anticipated. Tomorrow we get a look at the monthly trade balance figures, and the ISM non-manufacturing report for the month of November. Looking ahead, it should be noted that at the end of the week, the government will release its November employment report, and that issuance will be widely followed.

Meanwhile, few corporations weighed in with financial reports this morning. However, there has been some M&A news worth mentioning. Specifically, CVS Health (CVS) has offered to buy insurance giant Aetna (AET). Shares of both companies traded lower, as many investors had a mixed response to the sizable, $69 billion, deal.

Technically, the stock market continues to hold up reasonably well, as the end of 2017 approaches. More recently, Wall Street seems optimistic about the progress being made on the Administration’s business friendly tax reform measure. - Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.  

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11:50 AM EST - The U.S. equity market is off to a blazing start this week for those long equities. At the opening bell, the Dow Jones Industrial Average was up more than 200 points and then proceeded to jump close to 300 points in mid-morning trading. It has pulled back a bit in the last hour, but is still holding most of the initial day’s gains. The index of 30 bellwether companies has a lot of companionship in positive territory, save for the NASDAQ Composite, which is being held back by a pullback in the technology names. In general, buying is rather broadbased, with notable advances in the small and mid-cap sectors, and advancing issues leading decliners by a comfortable margin on both the Big Board and the NASDAQ.

Pushing equities to record highs (the Dow 30 passed 24,500 this morning and is looking on its way to 25,000) is news that the Senate passed tax reform legislation over the weekend that will allow it to work on a single tax reform bill with the House of Representatives to be presented to President Trump. The hope is that the President can sign tax reform legislation into law before the Congress breaks for the Christmas holiday. Wall Street is most enamored with the call to decrease the corporate tax rate from 35% to 20%, which it believes will bring more business back to the homeland. In response, investors, as noted above, are bidding equities higher again this morning.

From a sector perspective, it is nearly a clean sweep for the bulls, as nearly all of the 10 major equity groups are in positive territory. The leadership is coming from the financial stocks, which are benefitting from some significant financial regulation rollbacks last week. There also is some significant buying in the industrial, basic materials, and consumer discretionary sectors this morning. The retailing stocks, which were under heavy selling pressure for most of 2017, are rallying today. Conversely, Big Technology is not taking part in today’s rally, as most of the stocks of the technology behemoths are in the red this morning.

The U.S. stock market also is getting a boost from some major merger and acquisition news, which is a sign of a healthy market. Specifically, there is a deal in place for pharmacy giant CVS Health (CVS) to acquire insurance provider Aetna (AET). Under the terms of the $69 billion deal, which many pundits think may lead to a reshaping of American healthcare, Aetna shareholders would receive approximately $207 per share, consisting of $145 per share in cash and 0.8378 of share of CVS stock for each share held. Meantime, reports surfaced that Broadcom (AVGO) plans a hostile takeover of Qualcomm (QCOM) after the latter rebuked past attempts to work out a deal between the two technology giants.  Broadcom now plans to nominate a slate of 11 independent members to the board of Qualcomm after the semiconductor company rejected its $103 billion cash-and-stock bid last month.

Looking ahead to the second half of the trading session, we think it would take a Herculean effort on the part of the bears to turn the tide of trading on Wall Street. The broadbased small-cap sector is leading the move higher today, which is a key sign that the bulls continue to be heard from leading up to today’s closing bell. The European major bourses also are about to book nice gains on another bullish day for stocks. Stay tuned. – William G. Ferguson

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
 

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Before The Bell - The most recent five-day stretch of trading on Wall Street was an exciting one for those long equities. For starters, the Dow Jones Industrial Average used a couple of notable advances to blow past the 24,000 mark. The primary catalyst was hope that the Senate would pass a tax reform bill that will put the wheels in motion for both houses of Congress to iron out legislation for President Trump to sign before Congress breaks for the holiday. And the Senate indeed did such, voting in the early morning hours on Saturday to pass a tax reform bill. Wall Street is most excited about the provision to lower the corporate tax rate from 35% to 20%, which it expects would be a boon to Corporate America and a positive for an already historically high stock market.

On Friday, it was a rollercoaster ride for the investment community, with some sharp reversals in the direction of trading during the seesaw session. In addition to the tax reform hopes, trading was driven by the decision of General Michael Flynn to plead guilty to a lesser charge in Federal Court, which many pundits think will have him talk about the Trump Administration’s alleged dealings with Russia. The Flynn news spooked the market after a strong start to the session, but the losses were pared significantly into the closing bell when it was looking more likely that Senate Republicans would have enough votes to pass its tax reform plan. For the day, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index were down 41, 26, and five points, respectively. The small and mid-cap sectors also finished lower, but it was not a clean sweep for the bears, as there were more winning than losing stocks on the Big Board. Most of the damage was done by the NASDAQ, where decliners outnumbered advancers by a comfortable margin. The industrial and technology sectors were the notable laggards, while the energy group was very much in favor. The remaining groups among the 10 major equity groups did not finish the session too far removed from the neutral line.

Notwithstanding Friday’s setback, the equity market entered the final month of 2017 with a chance to make history. If the major equity averages were to finish the 31-day stretch in positive territory, it would be the first time since the inception of the stock market that it finished higher during each month of the year. The bulls will certainly be emboldened if Congress can get a tax reform bill on President Trump's desk for him to sign into law before year’s end. Too, there could be another Santa Claus rally on the horizon, especially with a strengthening U.S. economy making a case for investors to put more money into stocks. The investment community also seems to have already factored into its valuations the likelihood the Federal Reserve will tighten the monetary reins by 25 basis points at it two-day monetary policy meeting next week.

With the earnings news on the light side this week, all eyes of the investment community will remain on Capitol Hill, where the House of Representatives and Senate will meet to discuss how to iron out the differences in their tax reform proposals to get a joint bill on President Trump’s desk for signing. In addition to the tax reform news, investors will receive a number of important reports on the economy, including the latest employment and unemployment data from the Labor Department on Friday. Before then, investors will get reports on nonmanufacturing activity, factory orders, and the trade gap. As far as the Federal Reserve goes, it will be a slow week as central bank enters a quiet period ahead of its two-day FOMC meeting on monetary policy that commences next Tuesday.

Investors will begin the first full trading week of December with some M&A news. The lead headline is the agreement in place for pharmacy giant CVS Health (CVS) to acquire insurance provider Aetna (AET). Under the terms of the $69 billion deal, which may reshape American health care, Aetna shareholders would receive approximately $207 per share, consisting of $145 per share in cash and 0.8378 of share of CVS stock for each share held. Meantime, reports surfaced that Broadcom (AVGO) plans a hostile takeover of Qualcomm (QCOM) after the latter rebuked past attempts to work out a deal between the two technology giants. Specifically, Broadcom now plans to nominate a slate of 11 independent members to the board of Qualcomm after the semiconductor company rejected its $103 billion cash-and-stock bid last month.

With less than an hour to go before the commencement of trading stateside, the equity futures are pointing to a notably higher opening for the U.S. stock market, as investors cheer the growing prospect that tax cuts will be signed into law by President Trump before year’s end. Stay tuned.   - William G. Ferguson 

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.