After The Close - The stock market started a new week on Wall Street with a somewhat muted performance. Today, investors seemed a bit more concerned about the corporate profit outlook, now that the second-quarter earnings season has begun. Further, these worries seemed to offset some of the optimism about a more dovish Federal Reserve. At the close of trading today, the Dow Jones Industrial Average was ahead 27 points; the S&P 500 Index was up nominally; and the NASDAQ was higher by 14 points. Market breadth showed a divided session, with advancers about even with decliners on the NYSE. The healthcare and technology stocks pressed ahead, while the financials and basic materials issues took a step back.
Meanwhile, traders received few economic reports today. However, the Empire State Manufacturing Index registered a reading of 4.3 for the month of July, which was up nicely from the weak showing logged in June. Tomorrow will be a busier day for economic news items. Specifically, we will get a look at the latest monthly retail sales figures, a report on import and export prices, as well as the most recent industrial production numbers.
In the corporate sector, Citigroup (C) posted respectable results this morning, but the stock was unable to make any positive progress today. Traders may have had some worries about the broader banking environment. In the week ahead, we will hear from several large financial institutions, and Wall Street will likely be looking closely at those numbers. Elsewhere, in M&A news, shares of Symantec (SYMC) fell sharply in price on reports that the security software company is no longer in merger talks with technology leader Broadcom (BRCM).
Technically, the stock market has made some progress during the first part of July. However, as earnings season progresses, investors will likely want to see that the recent quarter’s numbers and year-ahead guidance will be able to support equity prices at their current levels. - 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 - It was another highly productive five-day stretch on Wall Street last week for those long equities. The major U.S. equity averages, helped by Friday’s continued buying surge, once again finished at record highs. The recent move upward push the indexes pass some historically significant milestones. The Dow Jones Industrial Average stands comfortably above the 27,000 mark; the NASDAQ blew past the 8,000 level; and the broader S&P 500 Index surged to an eye-catching 3,014.
Pushing the major indexes to record heights over the last fortnight of trading was better sentiment about the trade negotiations between the United States and China, a strong report on June nonfarm payrolls, and last week’s dovish remarks from Federal Reserve Chairman Jerome Powell. The change in the central bank’s posture on monetary policy earlier this year, which was only fortified last week by the Fed leader’s remarks before Congress, has provided a lot of support for equities, even during times when the sentiment on trade has turned sour.
On Friday, the continued buying was broadbased. In addition to the aforementioned strong performances from the Dow 30 (up 244 points), NASDAQ Composite (+48 points), and S&P 500 Index (+14 points), the smaller-cap Russell 2000 climbed 12 points (or 0.8%). From a sector perspective, the heavy lifting was done from the consumer discretionary and industrial groups. Overall, nearly all of the 10 major equity groups, save for healthcare and utilities, finished in positive territory, and advancing issues led decliners by a wide margin on both the New York Stock Exchange and the NASDAQ, to the tune of a more than two to one on the Big Board.
Turning to the week at hand, the investment community’s attention will flip to earnings, but with eyes still on the trade situation and the Fed. On the earnings front, the second-quarter season unofficially kicks off with tomorrow’s latest quarterly snapshots from banking giants JPMorgan Chase (JPM – Free JPMorgan Chase Stock Report) and Goldman Sachs (GS – Free Goldman Sachs Stock Report). In addition to those two banks, we will get quarterly data from five Dow-30 components, including technology behemoth Microsoft (MSFT – Free Microsoft Stock Report) after Thursday’s closing. Given this schedule, investors may want to keep an eye on the financial sector early in the week, as there will be several other banks in addition to the aforementioned giants reporting results over the next five days.
On the business beat, the reporting schedule will be headlined by three prominent releases. Tomorrow morning will bring the latest data on retail sales and industrial production, while on Thursday the latest figures on housing starts and building will be released. Each of these reports will likely to be examined by the Federal Reserve ahead of next week’s monetary policy meeting for clues to how the economy is faring.
With less than an hour to go before the commencement of the new trading week stateside, the equity futures are pointing to some continued buying when the U.S. stock market opens. So far overseas, the main indexes in Asia finished modestly higher overnight and similar gains have been recorded so far on the Continent, with the major European bourses nominally in the black. The Asian indexes retraced early session losses and then some after reports showed that China’s industrial production and retail sales for June beat expectations. The monthly indicators offered some hope after quarterly data showed that China’s GDP growth moderated to 6.2% last quarter, the weakest since the data series began 27 years ago. Stay tuned. – William G. Ferguson