After The Close - The stock market traded lower this morning, and remained in negative territory throughout the session. Investors, while pleased with the Federal Reserve’s more accommodative tone, are likely still worried that strained trade relations between the United States and China could persist, causing additional economic and corporate challenges. At the close of the day, the Dow Jones Industrial Average was down about 44 points; the broader S&P 500 Index was off nearly six points; and the NASDAQ was lower by 30 points.
Market breadth showed a mixed session, with decliners just slightly ahead of advancers on the NYSE. From a sector perspective, the technology, financials, and basic materials issues weighed on the market, while the high-yielding utilities and defensive healthcare names managed to make some progress.
Meanwhile, it was a light day for economic news. However, it is worth mentioning that the Consumer Price Index (CPI) increased 0.1% during the month of May, more or less meeting expectations. Tomorrow will be somewhat busier. Specifically, we will get a look at the latest weekly initial jobless claims numbers, as well as a monthly report on import and export prices.
In the corporate sector, shares of Dave & Buster’s Entertainment (PLAY) sank after the restaurant operator delivered a disappointing earnings release. After the market closes today, investors will get a look at the latest quarterly report from specialty apparel company Lululemon Athletica (LULU).
Technically, equities made solid progress during the first week of June. However, it is not clear that the bulls can mount a sustained buying campaign, and push stocks meaningfully higher from here. Much will likely depend on the developments overseas. Stay tuned. - 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 - The major U.S. equity indexes started yesterday to the upside, again emboldened by the Trump Administration’s decision late last week not to move forward with tariffs on Mexico and the continued dovish stance on monetary policy by the Federal Reserve. However, the move higher stalled by midday and the major averages reversed course. The Dow Jones Industrial Average was the first of the large-cap group to fall into the red, but the losses were contained, and the Dow 30, along with the tech-heavy NASDAQ Composite and the broader S&P 500 Index finished the choppy session only slightly to the downside and overall with a relatively flat performance.
There was no catalyst that triggered the late-morning reversal other than perhaps some selective profit taking in a market that was trying to make it six-consecutive winning sessions; that streak barely ended yesterday. The market, after the sharp move higher (the blue-chip Dow 30 was up nearly 190 points at its intra-day peak) and with a subsequent similar move lower, then put in a rather directionless performance, with the indexes bouncing in and out of positive territory. Most of the major equity groups finished none too far removed from the neutral line and the spreads between advancing and declining stocks on the Big Board and the NASDAQ were rather narrow.
Meantime, with second-quarter earnings season still several weeks away from commencing, the focus for market participants after the international trade dealings—or lack thereof—and the Federal Reserve is on the U.S. economy. On Tuesday, we received a notable report on producer (wholesale) prices (up a nominal 0.1% in May) that showed inflationary pressures are benign and nothing that would keep the central bank from cutting interest rates later this year if economic growth were to start slowing. And just moments ago, the Labor Department released the companion report on consumer prices for the month of May. That report showed that the Consumer Price Index for all urban consumers increased 0.1% in May on a seasonally adjusted basis after rising 0.3% in April. Over the last 12 months, the all items index increased 1.8 percent before seasonal adjustment. This data were yet another sign that inflation is benign and will not prevent the Federal Reserve from loosening the monetary reins later this year if deemed necessary.
With less than a half hour to go before the commencement of the new trading day on the homeland, the equity futures are suggesting some modest selling when the U.S. stock market opens; the futures fell back a bit after the aforementioned CPI data were released. Likewise, it is a sea of red ink overseas thus far today. The main indexes in Asia finished lower overnight, while the major European bourses are in negative territory as trading moves into the second half of the session on the Continent. The overseas rally is stalling, as treasuries rise and oil prices fall. Pushing global equities lower is once again worries about the ongoing trade war between the United States and China. Specifically, President Trump said that said that he will not return to the bargaining table with China until Beijing returns to terms negotiated earlier this year. The hopes of an accord between the world’s two-largest economies still looks far off, and that realization is roiling the global equity markets a bit this morning. And with no assurance yet that U.S. and China leaders will meet later this month at the G20 summit, the uncertainty lingers, and that is usually not a good backdrop for the performance of stocks. Hence, there has been a pickup in selling around the globe over the last 24 hours. Stay tuned. - William G. Ferguson