After The Close - The U.S. stock market put in a generally constructive session today. True, the Dow Jones Industrial Average was down 26 points. But the broader S&P 500 Index was up seven points, and the NASDAQ was higher by 65 points. Market breadth was favorable, too, as advancers managed to outnumber decliners on the NYSE. The technology and consumer cyclical stocks moved nicely higher, offsetting declines in the financial and energy names.
There were a few supportive economic reports released this morning. Specifically, initial jobless claims moved lower to 218,000 during the week of June 9th, suggesting that the nation’s job market is still in good shape. Elsewhere, retail sales increased 0.8% in the month of May, which surpassed analyst expectations by a wide margin. Finally, business inventories also strengthened during the month of April. Tomorrow, the latest monthly Empire Manufacturing report and the most recent industrial production figures are set to be released.
In corporate news, a few retail companies weighed in with their results over the past 24 hours. To wit, shares of Tailored Brands (TLRD) and Michaels Companies (MIK) moved sharply lower today, after these companies failed to impress Wall Street.
Technically, the stock market continues to edge higher, as we move through the month of June. However, it remains to be seen if the bulls can keep their buying campaign in place through the summer months. - 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 - U.S. stocks opened the session nominally higher yesterday on the heels of back-to-back grudging advances the prior two trading days. These further early gains came as the Federal Reserve got ready to wind up its two-day FOMC meeting. At that get together, the increasingly transparent central bank voted to raise interest rates by a quarter of a percentage point. That marked the second rate hike so far this year, with an additional uptick expected in September and a possible fourth adjustment perhaps being tacked on in December. However, a majority of pundits still expect the Fed to hold the line at three increases for the year.
Regarding the stock market, it opened the session to the upside and then proceeded to retain that modestly bullish edge for the rest of the morning. Once again, leadership was provided by the NASDAQ. However, the advance was largely a big-cap one, as the smaller indexes wilted somewhat. Also, more stocks were lower than higher on the day through the morning, as some skittishness was apparent as investors awaited the Fed. As to the various sectors, about half were higher leading up to the noon hour in New York, with notable weakness in the telecom sector.
As to this latter group, there were investor concerns that AT&T (T), which received court approval to buy Time Warner (TWX) was overpaying for the assets. So, AT&T shares fell almost 5% in the morning. However, some other media stocks, sensing approval for their would-be purchases in this field, rallied on the day, most notably shares of Dow Jones Industrial Average component Walt Disney (DIS – Free Walt Disney Stock Report), which gained more than 2%. For the most part, though, the focus was on the Federal Reserve and the 2:00 PM (EDT) conclusion of its latest two-day confab.
The market then continued on an uneven course into the 2:00 announcement. Just as the FOMC meeting concluded, the Dow was off about 35 points, but the NASDAQ was still ahead by some 20 points in a continuation of the uneven pattern in evidence thus far this week. As to the central bank, it did, indeed, vote to raise interest rates by a quarter of a percentage point, as widely expected. However, and this was somewhat surprising, the Fed also suggested that it saw two more rate hikes this year as likely--not the one that a slim majority of Fed watchers had expected. So, stocks weakened slightly on that suggestion.
The Dow then worked still lower into the close, as did the S&P 500 Index, the S&P Mid-Cap 400, and the small-cap Russell 2000. Only the NASDAQ retained a slight advance until the final moments, when it, too, fell modestly into the red. True, there was not a sea of change in expectations here, but with the Fed touting faster GDP growth. The likelihood of further declines in unemployment, and somewhat higher inflation going forward, there was a sense that the central bank is becoming more serious on the rate front. In addition to possible increases in September and December, there is the probability for three more rate adjustments in 2019.
Looking out to the penultimate session of the week, we see that stocks ended sharply lower in Asia in the overnight hours, while on the Continent, the leading European bourses are now moving down, as well. Also, the yield on the 10-year Treasury note, which nudged up to 2.98% in late dealings yesterday, is down to 2.95% early this morning. As to our futures, the early trend is strongly higher. - Harvey S. Katz, CFA