After The Close - The stock market got off to a weak start this morning, but managed to reverse course, and move into positive territory in the afternoon. At the close of the session, the Dow Jones Industrial Average was ahead 39 points; the broader S&P 500 Index was up seven points; and the NASDAQ was higher by 32 points. Market breadth was somewhat favorable, as advancers led decliners by a modest margin on the NYSE.
Most of the major stock market sectors made progress, with leadership in the technology and basic materials issues. Meanwhile, the telecom names retreated.
Investors received no major economic news reports today. However, tomorrow will be a busier day, with a key inflation release due out. Specifically, the Consumer Price Index for the month of January will be reported, and that will be of importance to traders watching the Federal Reserve. The latest monthly retail sales figures will also be of interest.
Meanwhile, traders continue to pay attention to the numerous fourth-quarter profit reports that are still being issued on a daily basis. Today shares of Under Armour (UAA) traded nicely higher, after the apparel manufacturer delivered better-than-anticipated top-line results. In the consumer space, shares of PepsiCo (PEP) also had a good day, as the food and beverage maker’s recent results showed some promise.
Technically, the stock market has firmed up over the past few sessions after pulling back sharply at the start of February. Today’s gains extend the advance that started a few days ago, and may well signal that the bulls and bargain hunters are willing to step in and support the market at this level. No doubt, as Wall Street delivered a stellar performance last year, there is likely considerable capital looking to be invested in 2018. - 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 - Following a strong close to the stock market on Friday, in which an up-and-down session saw the 30-stock Dow Jones Industrial Average finally end matters with an imposing gain of 330 points, the equity markets opened impressively higher yesterday morning. This further comeback followed strong gains in Europe overnight on hopes that the recent plunge in equities had run its course. Also higher before the open yesterday were oil prices and, somewhat more ominously, interest rates, with the 10-year Treasury note's yield rising back up to 2.88%.
That jump in rates put the 10-year note at a four-year high. Still, a modicum of optimism was returning to the stock market at the open, with the Dow starting matters ahead by some 150 points. Also, the NASDAQ, a near 100-point gainer on Friday, likewise strongly higher at the outset of trading in a week that will be notable for a critical retail sales release on Wednesday and a major housing market issuance on Friday. For now, though, most investors were focused on attempts by the stock market to put in a secure bottom after a difficult week for the bulls.
Meanwhile, after that quick start, the market moved higher still, climbing by close to 370 points on the Dow before backing off some. As we reached the 30-minute mark, the Dow was still up by some 250 points and the NASDAQ was ahead by close to 60 points, down from an earlier advance of more than 90 points. Then, after a brief letdown, in which the gains moderated further, the market regrouped, and stocks would head toward their morning highs as we headed toward the noon hour in New York.
At the morning's best levels, the Dow was ahead by just over 450 points and the NASDAQ was higher by nearly 120 points. That strength reflected the stock market's shift away from interest rates, which were little changed at mid-session, to President Trump's infrastructure plan. The rebuilding plan calls for spending on the order of $200 billion. In the meantime, worries about an overheating economy and a consequent further increase in interest rates likely will persist. For much of yesterday, though, such concerns had been put to rest, apparently.
The market's drift higher then persisted into the afternoon, with the Dow's advance reaching a session-best of 574 points before some slight easing into the close left that composite with a still-formidable gain on the day of 410 points. The NASDAQ, also sporting a wire-to-wire win concluded the day's action with an advance of 107 points. The S&P 500 Index, meantime, climbed 36 points, or 1.4%, to end matters at 2,656,. The Russell 2000, or the key small-cap benchmark, rose just under 1%, after having been lower for the first part of the session.
Leading the way higher, among individual Dow components, were shares of technology icon Apple Inc. (AAPL – Free Apple Stock Report), which jumped 4.0%. Just behind that stock was Dow DuPont Inc. (DWDP – Free Dow DuPont Stock Report), which jumped more than 3%. In all, it was a strong day for the bulls, who have now tacked on about a thousand points from their low point reached this past Friday afternoon. This sort of dramatic up-and-down action is typical after a major reversal, as the bulls try to put in a sustainable bottom from which they can then rally the market.
Now, looking ahead to a new day, we see that stocks in Asia, on the heels of yesterday's fireworks in New York, were higher in overnight dealings, while in Europe, the early read on the bourses is lower. In other markets, oil prices are essentially flat, while interest rates, which nudged slightly higher yesterday to close at a yield of 2.86% on the 10-year Treasury note, are now passing hands at a yield of 2.83%, while rate concerns linger. Finally, U.S. equity futures are pointing to a weaker open when trading resumes a bit later this morning, although they are off of their earlier lows. – Harvey S. Katz, CFA