After The Close - Stocks got off to a strong start this morning, and managed to move higher as the session progressed. Traders seemed upbeat about the economy, and less worried about global trade disputes, at least for today. At the end of trading, the Dow Jones Industrial Average was ahead 320 points; the broader S&P 500 Index was up roughly 24 points; and the NASDAQ was higher by nearly 68 points. Market breadth showed widespread buying, with advancers well ahead of decliners on the NYSE. Most of the major equity sectors forged ahead, with sizable gains in energy and basic materials issues. In contrast, utilities declined sharply, as investors were busy deploying capital to more exciting areas of the market.
It was a light day for economic news. Tomorrow few reports will be released, as well. However, the pace should pick up on Wednesday, as the Producer Price Index (PPI) for June, and the latest monthly wholesale inventories report, are due out.
In the corporate arena, few major corporations delivered financial reports today. However, we did hear from Helen of Troy (HELE). Shares of the consumer products company surged in response to an upbeat release. Looking ahead, the second quarter has just closed, and numerous companies will be issuing reports over the next few weeks. These issuances, if positive, may serve as the catalyst needed to move the market higher from here.
Technically, the stock market pulled back a bit in the final weeks of June. While still in the very stages, July seems to be shaping up to be a better month. - 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 - Concerns over an escalating trade war with economic behemoth China and worries about a soon-to-be released June jobs report combined to push the U.S. equity futures lower in pre-market dealings on Friday. However, once the jobs report was released at 8:30 AM (EDT) showing a better-than-expected report on non-farm payroll growth, the bulls got back into the act. The futures rallied and stocks opened the final session of the holiday shortened week nicely to the upside. The gains would then continue over the course of the morning, with some notable momentum even building.
Regarding the trade war, after the President imposed tariffs on $34 billion of Chinese imports, that fast-growing nation responded with actions of its own, stating that it would impose higher levies on American-made goods ranging from soybeans to automobiles. The problem is not the $34 billion, which is not a massive figure, but the additional threat that the aggregate final tariff total could reach $550 billion that has many of Wall Street on edge. However, as noted, some of these concerns were alleviated in the short run, at least, by the upbeat news on the employment front.
As to that issuance, the Labor Department noted that the nation added 213,000 new jobs in June, some 28,000 above expectations. Job tallies for April and May, meantime, were revised upward by a cumulative 37,000. Also in the report, wages rose modestly; the labor force participation rate improved from 62.7% to 62.9%; and another 600,000 Americans joined the labor force last month. The lone discordant note was an increase in the jobless rate from 3.8% to 4.0%. However, that uptick could be explained by the growing ranks of those now actively looking for work, and thus now are again part of the labor force and regarded as unemployed.
Armed with this upbeat issuance, which came on top of earlier solid data on manufacturing and non-manufacturing, stocks found new reasons to head higher. The fact that traders were becoming less alarmed by the worsening trade rift, at least for now, also helped stocks get out to a good gain that persisted through the morning and into the afternoon. In all, the Dow Jones Industrial Average moved out to a vigorous advance north of 160 points by mid-session. But the real winner was the tech-heavy NASDAQ, which jumped ahead by more than one percent. The NASDAQ is benefiting from proportionately less exposure globally than the Dow.
Meanwhile, the rally continued through the latter stages of the afternoon, with the upturn being especially broad based, as all 10 of the major equity groups headed higher, led by better than one-percent increases in health care, technology, and telecom. Further, gaining stocks held a formidable three-to-one lead on declining issues on the Big Board as trade war jitters seemed to take a back seat to optimism on the economy. Indeed, it now seems as though GDP growth in the just-ended second quarter could exceed 4% and by a decent margin, with the jobs report just the latest evidence of this emerging strength.
The rally would then persist into the close, with the Dow edging off somewhat, but the other indexes remaining near session highs. In all, the blue-chip composite would jump up by 100 points; the S&P 500 would rise 23 points; and the NASDAQ, boosted by stellar gains in technology and biotech, would add 102 points, or more than 1.3%. A huge jump of nearly 20% in shares of Biogen (BIIB) helped the NASDAQ. The biotech company was boosted by good drug news. All told, it was a solid day for stocks as a booming economy seems to be taking some of the heat off of trade.
Looking out on a new day and new week, we see green arrows all along the way, starting with a higher session in Asia in the overnight hours. Stocks did especially well in China, as trade concerns seemed to take a back seat for now. Elsewhere, the major bourses are thus far heading higher in Europe; oil is nominally in the green and Treasury note yields are edging higher. Finally, in the futures markets, U. S. equities are pushing nicely higher ahead of the market's open in New York. – Harvey S. Katz, CFA