After The Close - Equities put in a choppy session today, but ultimately made some progress. At the close of trading, the Dow Jones Industrial Average was ahead 21 points; the S&P 500 Index was up five points; and the technology-heavy NASDAQ was higher by 13 points. Market breadth was supportive, as advancers outpaced decliners by a modest margin on the NYSE. Most of the major equity groups pressed ahead, with respectable gains in the financial and energy names. In contrast, the utility and industrial issues were areas of weakness.
Meanwhile, traders received a few economic reports this morning. Specifically, the Producer Price Index (PPI) rose 0.1% in the month of June. Analysts had been looking for a somewhat tamer reading, but inflationary pressures still are not likely a concern. Elsewhere, initial jobless claims came in at 247,000 for the week of July 8th, which was in line with expectations. Tomorrow we will get look at the Consumer Price index (CPI) for the month of June. Retail sales and the latest monthly industrial production figures also will be released.
Elsewhere, not too many corporate reports were issued today. However, tomorrow we will hear from quite a few big banks, including JPMorgan Chase (JPM - Free JPMorgan Chase Stock Report), Wells Fargo (WFC), Citigroup (C), and PNC Financial Services (PNC). These reports signal that the second-quarter earnings season is underway. Traders will, no doubt, be looking carefully at the numerous reports being released over the coming weeks. Of ultimate importance will be the guidance that companies offer for the remainder of the year.
Technically, the stock market is doing nicely, after having pulled back in the second half of June. Perhaps traders are now anticipating a better-than-expected earnings season. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
12:10 PM EDT - U.S. stocks were mostly mixed on Thursday morning, with the three major indexes opening higher before falling into negative territory an hour into the session. But the downturn was short-lived, as each of the groupings recovered shortly thereafter. The aggregate gains in these large-cap indexes have been modest, though, and market breadth is inconclusive. Investors are evidently collecting some gains after yesterday’s rally among the smaller-cap issues. Raised guidance from retailer Target (TGT) helped catalyze the mid-morning turnaround, as traders hoped the update is a positive harbinger for the sector’s outlook. Accordingly, several other retail giants are trading higher today.
On the economic front, mixed data from the business beat has contributed to today’s up-and-down movement. While the U.S. Producer Price Index rose 0.1% in June, versus a flat estimate, a slightly higher jobless claims tally likely offset whatever modest optimism stemmed from the former report. The major market sectors are a mixed bag, too. Healthcare, utilities, and basic materials are among the weakest performers so far today’s session.
Meanwhile, oil shook off some early pressure and realized a modest increase in per-barrel valuations. Though the commodity market was challenged by another negative report on the part of OPEC, strong demand trends helped negate the bearish developments. OPEC has struggled to wrangle its member nations together enough to institute a comprehensive drilling accord, and reports that adherence to the limit has waned in recent weeks only has served to stoke concerns. However, the demand environment in China may foretell a wider improvement in market conditions, which has ostensibly emboldened the bulls this morning.
Looking ahead, corporate earnings figure to play a larger role in trading over the coming few weeks. Tomorrow morning will see traders processing updated quarterly performance reports from JPMorgan Chase (JPM – Free JPMorgan Stock Report), Citigroup (C), and Wells Fargo (WFC). Yesterday’s dovish tone on monetary policy from Federal Reserve Chair Janet Yellen has benefited a wide swath of equities, though it could spell for reduced guidance from financial institutions. We expect some clarity on that issue when these banking giants offer their outlook tomorrow. – Robert Harrington
As of this article’s writing, the author did not hold positions in any of the companies mentioned.
Before The Bell - Following back-to-back indecisive sessions to start the week--although Tuesday's trading did have plenty of intra-day volatility, but just a slight aggregate move--the bulls stepped out front yesterday morning and wound up fashioning another wire-to-wire win. And, in fact, there was little question about the ultimate outcome, as stocks soared from the opening bell, with the Dow Jones Industrial Average jumping out to a triple-digit gain in minutes. The bulls sustained most of that momentum through the morning, entering the afternoon hours with that composite up by better than 125 points, securing another record in the process.
Behind the buying was optimism regarding prepared remarks before the House of Representatives by Federal Reserve Chair Janet Yellen. Real estate and energy stocks were paramount in the rise early on. As to Ms. Yellen, she intoned that the central bank was likely to start reducing its massive $4.5 trillion portfolio later this year. The Fed had bolstered the portfolio in the early years of the financial crisis as a way of stimulating the economy. In all, she took a less hawkish stance, perhaps because the pro-growth policies expected earlier have been slow to take hold due to in-fighting in Washington.
Our sense is that the Fed will take a deliberate approach toward raising interest rates with perhaps just one further rate adjustment this year--and that probably not coming until late in 2017. Treasury yields, meantime, fell back after her prepared testimony was released. In other Fed-related news, the lead bank issued its closely tracked Beige Book economic summation in mid-afternoon, again saying that the economy was continuing its irregular march forward. Here, too, there were few surprises, and stocks held their solid gain after that release.
Breaking the advance down, it was, as noted, led by energy, as oil prices rose on a larger-than-expected drawdown of fuel stocks. Health care also did well, gaining almost a percentage point in the morning. The industrials, technology, and the recently struggling telecoms likewise acquitted themselves quite well, while gaining stocks held a formidable lead over declining issues. It would seem that the political concerns that drove trading to brief extremes on Tuesday, and which were focused on Donald Trump Jr. and some e-mails, were pushed to the background--for one day at least.
Meanwhile, the advance continued into the afternoon, with the upturn not interrupted by the 2:00 PM (EDT) issuance of the Fed's Beige Book, which essentially held that the nation's economy has been growing at a slight to moderate pace over the last several weeks across all 12 regions of the country. The report also maintained that household spending also held up in most regions, although car sales had weakened in about half the Fed Districts. The summation also affirmed that while unemployment remained low, wage growth had yet to accelerate on a sustained basis.
The advance, which as noted, continued after the Beige Book's release, stayed strong into the close, with the Dow Jones Industrials closely up by 123 points. The S&P 500 Index was better by 18 points and the NASDAQ, buoyed by notable strength in technology, advanced by a strong 68 points, or 1.1%. Also, many more stocks were up than down. The ability of Janet Yellen to retain a hold on the market thus was reaffirmed once more. Clearly, the gradual nature of the Fed with regard prospective monetary policy was a big factor in this very formidable mid-week equity market advance.
Now, a new day begins, and we see that stocks were higher in Asia in the overnight hours, following comments yesterday by the Fed Chair, while in Europe, trading has a bullish edge, as well. Also, of note, oil is off a bit on concerns about compliance on the part of OPEC; gold is trading a little higher; and Treasury yields are off some, on the dovish Fed comments. Finally, in early dealings on our shores, the equity futures are showing modest increases on the Fed news as well as on some raised guidance from retail giant Target (TGT). - Harvey S. Katz