After The Close - The last day of the week began on the upside, but stocks largely trended downward throughout the session.
To varying degrees, the market’s slide could be attributed to mixed corporate earnings reports, escalating tension in the Middle East, unsettled trade talks between the U.S. and China, and uncertainty about the Federal Reserve’s next move. Regarding the latter, media reports surfaced suggesting the lead bank will only cut interest rates by a quarter point at its next meeting in July, whereas expectations had been rising for a half point cut.
At the closing bell, the Dow Industrials were down 69 points, the broader S&P 500 was off by 18 points, and the tech-heavy NASDAQ had shed 61 points. Performance among the 10 major market sectors varied considerably, ranging from a half percentage point gain for energy stocks to a 1.4% loss for utilities.
Elsewhere, oil moved up following yesterday’s news that the U.S. had shot down an Iranian drone in the Strait of Hormuz. Also, today came word that Iran had seized a British oil tanker along that key waterway. Light sweet crude advanced 1.4%, to around $56.10 a barrel. However, prices were still off by 7% for the week, reflecting ongoing concerns over rising global supply, and down 19% year over year.
After a solid open, shares on the European bourses also spent most of the day in a downtrend. However, the major indexes held on to end the session on the upside. Germany’s DAX and Britain’s FTSE 100 each advanced about a quarter percent, while France’s CAC-40 closed just above breakeven. – Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before The Bell - On the heels of an unprepossessing first three trading days of this week, Wall Street began the penultimate session of the five-day stretch in similarly underwhelming fashion, with modest losses all around. At its morning nadir, the 30-stock Dow Jones Industrial Average was off some 85 points. However, the market did manage to pare these setbacks, and so as we exited the first half hour of trading, the Dow was still off 25 points, while the S&P 500 Index and the NASDAQ were lower by four and 20 points, respectively. As before, the hang-ups remained earnings disappointments and a lack of progress in U.S.-China trade talks.
The big casualty on the session to that point was Netflix (NFLX), as the streaming services giant saw its shares tumble after it said it lost U.S. customers and added fewer-than-expected subscribers around the world. Also lower, were shares of Dow component UnitedHealth Group (UNH – Free UnitedHealth Stock Report), which dropped almost two percent. The problem there was that the insurance company indicated that 2019 revenues would come in at or below consensus forecasts. Also of note before the market opened was an 8,000 rise in initial weekly jobless claims, with that number climbing to 216,000. However, that was still a very low number.
These profit disappointments aside, there were some favorable reports, and a number of high-profile companies rode those better figures to early gains, highlighted by diversified manufacturer, Honeywell (HON), with that issue rising by better than 2% in the early going. Meanwhile, back on the business front, the Conference Board released the Index of Leading Indicators yesterday morning, and the report was disappointing, as well, with that barometer of economic activity falling by 0.3% last month. That was the first such decline since last December.
The setback in the LEI was driven by weakness in new orders for manufacturing, housing permits, and unemployment insurance claims. However, such weakness aside, the market managed to stabilize as we moved further into the morning, with the S&P 500 even going slightly positive as we reached the 90-minute mark of the trading day. However, the averages then backed off and hit their lows for the day as we approached the noon hour in New York. In all, the Dow fell by more than 150 points, almost backing off to the 27,000 level before some buying evolved.
Stocks would then stay lower for just a short while before they began to recover seriously, and as we moved inside the final 90 minutes, the Dow, the S&P 500, and the NASDAQ had all turned the corner into the green, with the broader-based S&P 500 Index leading the way higher. What stoked the turnaround, apparently, were comments by New York Federal Reserve Chair John Williams who said that the Fed needed tomcat quickly when the economy was slowing, feeling that it was better to take preventive measures than to wait for a full-fledged downturn.
The market then settled in with either small gains or narrow losses for much of the rest of the way before finally ending matters modestly in the plus column with respect to the S&P 500 and the NASDAQ, and just about at the breakeven point on the Dow, with the aforementioned comments by the New York Fed Chief offsetting cautionary words from Kansas City Fed Chair Esther George on Wednesday. Now, as Friday begins, we see that shares were sharply higher in Asia overnight on hopes for an aggressive Fed easing, while they are likewise higher in Europe so far this morning. Also, Treasury note yields are edging upward and U.S. equity futures are pointing to a very strong start when trading resumes on our shores. - Harvey S. Katz, CFA