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After The Close - The equity markets started out the week with a mixed-to-weaker performance. At the close of the day, the Dow Jones Industrial Average was down 76 points; the broader S&P 500 Index was off eight points; while the NASDAQ was higher by 11 points. Market breadth showed a somewhat negative bias to today’s session, with declining issues moderately ahead of advancers on the NYSE. Most of the major equity sectors landed in negative territory, with notable losses in the energy and utility issues. On a related note, the price of crude oil slipped about 4%, to just under $52 a barrel, today, and that likely put pressure on the shares of oil and gas operators. In contrast, the technology and healthcare stocks managed to move nicely higher, bucking the downtrend.

Traders received no major economic reports this morning, which likely contributed to the market’s quiet tone. Tomorrow, will be a light day for news, as well. Although, we will get a look at wholesale inventories for the month of November. On Wednesday, few reports are scheduled. However, traders may turn their attention to the latest weekly crude oil supply numbers, especially since the energy sector remains a main area of concern for many on Wall Street.

In the corporate arena, just a few companies weighed in with results over the past 24 hours. Specifically, shares of the Acuity Brands (AYI) sank after the electronics company posted softer-than-anticipated results. Further, shares of Commercial Metals (CMC) were down, after that company delivered a weak report. The pace of corporate news will soon intensify, as the fourth-quarter earnings season starts up in the coming days.

Technically, stocks have been moving sideways for a while. However, that may soon change, as companies start to weigh in with their numbers and provide fresh guidance for 2017. - 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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12:10 PM EST - The major U.S. equity averages started the session in mixed fashion, but as the morning hours progressed it became clear that there is a modestly bearish undertone to trading. The Dow Jones Industrial Average and the broader S&P 500 Index have been in negative territory since the opening bell, but the NASDAQ, which hit an all-time intra-day high this morning, has fared better on the gains we are seeing in the technology and healthcare sectors. It also should be noted that the small and mid-cap sectors are in the red, which is the result of declining issues leading advancers by a decent margin on both the NYSE and the NASDAQ, though the spread has narrowed some in the last 60 minutes of trading.

Our sense is that it is just a case of some modest profit taking after last week’s run-up, in which the Dow 30 came within less than one point of the 20,000 mark during Friday’s intra-day trading. There is little news of note on the economy and earnings fronts to push the major averages higher from their already lofty perches. Hence, we are seeing ongoing selective profit taking. The biggest selling is being seen in the energy, financial, and industrial groups. The energy sector is being hurt by a drop in crude oil quotations on both the New York Mercantile Exchange and on the Continent. Reports that Iran continues to pump oil at a significant pace is pressuring oil prices today.

Speaking of Iran, reports surfaced this morning that a U.S. Navy ship fired warning shots at Iranian boats on Sunday near the Strait of Hormuz. According to two U.S. Defense officials, five or six Iranian patrol crafts approached the U.S.S. Mahan near the strait at high rates of speed. The Strait of Hormuz, where the occurrence took place, is situated between the Gulf of Oman and the Persian Gulf. The incident is the latest tense encounter between the two countries in and over waters near Iran in recent months. The release of the report prompted some selling this morning.

Looking ahead to the second half of today’s session, it may be shaping up to be a game of tug-of-war between the bears and the bulls. However, with the dearth of news from the earnings and business beats today, we doubt that either group will have the muscles to pull the rope totally in their favor. The recent partial recovery in the small-cap sector and the narrowing in the spread between losing and winning issues on the NYSE and NASDAQ may suggest that we could be in for a mixed performance on Wall Street to start the week. 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 first trading week of 2017 was a constructive one for those long equities. However, the bulls were not on cruise control like we saw in the weeks following the U.S. Presidential Election, as there were some selective responses from the bears last week. But in the end, the bulls did prevail, with the Dow Jones Industrial Average up 1% for the holiday-abbreviated four-day stretch and now less than 40 points from the milestone 20,000 mark. The advances were even more formidable for the S&P 500 Index and the tech-heavy NASDAQ, which finished with respective gains of 1.7% and 2.5%. Overall, it was a broadbased win for the bulls, with strong advances in the small and mid-cap sessions, as well.

In addition to the continued boost the market is getting from hope that the pro-business incoming Trump Administration, which has promised corporate tax cuts and regulation rollbacks, will be a boon for both Corporate America and Wall Street, some supportive data from the business beat is helping the mood on Wall Street. Last week, good reports on manufacturing and nonmanufacturing activity from the Institute for Supply Management and strong automobile sales were greeted positively by the investment community. Meantime, the week’s most important report on the labor market was mixed. Although job creation was below expectations, at 156,000 positions, and the unemployment rate ticked up nominally, investors liked the increase in hourly wages, which was taken as a sign that the labor market is nearing full employment. This also may be a sign that inflation is edging up toward the Fed’s target. The report did nothing to change the sentiment about what the Federal Reserve might do with regard to monetary policy in 2017—and investors took the report in stride.

Looking to the week ahead, we would not be surprised if the market got off to a lackluster start and traders take a bit of a pause. There is little in the way of notable economic or earnings news over the first three to four days of trading. The lack of market moving data from either Corporate America or the business beat, and the possibility that the major equity averages may meet some resistance at some levels that have provided that over the latest bull run—20,000 for the Dow Jones Industrial Average and, to a lesser extent, the S&P 500 Index at 2,275 and the NASDAQ at 5,500—may keep the bulls in check over the next few trading sessions. Later on in the week, we will get some news from both fronts, with the latest quarterly report from JPMorgan Chase (JPM - Free JPMorgan Stock Report) and data on retail sales and producer (wholesale) prices this Friday. The quarterly figures from the banking giant will be closely monitored, given the recent strong performance of the financial sector, and the retail sales data will be highly anticipated as it will give investors the clearest indication of how the retailers fared during the all-important holiday shopping season. The retailing stocks were hurt last week by disappointing comparable-store figures and profit warnings from department store operators Macy’s (M) and Kohl’s (KSS).

With less than an hour to go before the start of trading stateside, the equity futures are suggesting a mixed opening for the U.S. equity market, with the Dow 30 and broader S&P 500 Index likely to begin the day to the downside and the NASDAQ modestly higher. Investors should note that most of the major European bourses are sporting losses of more than a half-percentage point, as trading moves into the second half of the session on the Continent. This may provide the bears the opportunity to make early statement here. 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.