After the Close - A late afternoon advance on Wall Street today turned modest losses into modest gains on most of the major averages. At the close, the Dow Jones Industrial Average was up 15 points, the S&P 500 gained two and a half points, but NASDAQ was down four points. Market breadth similarly painted a mixed picture, with advancing issues outnumbering decliners by a narrow margin on the New York Stock Exchange, but with more losers than winners on the NASDAQ.
It apparently wasn’t a lack of positive business news that left investors uninspired this morning. The week’s initial jobless claims figure came in lower, about as expected, pointing to further labor market improvement in the coming months. Another positive piece of data arrived in the form of a jump in the Philadelphia Fed’s manufacturing index. And word came in that the Conference Board, a private research organization, had issued a report showing its gauge of leading economic indicators had advanced for the fourth month in a row. However, the leading indicators figure was not quite as strong as had been expected.
Overall, today’s stock market action seemed to reflect the digestion of recent gains and a dose of caution, to a degree regarding the deteriorating situation in Iraq. The aversion to risk was reflected by a strong utilities sector performance. Normally, utilities stocks are viewed as highly defensive.
The cautious feeling on Wall Street was also strongly evidenced by a $48-an-ounce spike in gold prices above the $1,300 level. Gold had been slumping for the past 18 months, after the problems in Europe began clearing up. But the seriousness of the situation in Iraq may be causing traders to rethink their asset allocation strategy. Gold shares, including Newmont Mining (NEM) and Barrick Gold (ABX), found renewed buying interest as a result.
Oil prices climbed a bit on the day as well, with the international Brent blend rising to a nine-month high, above $115 a barrel. Domestic oil prices may not be affected to the same extent as the Brent benchmark, given rising North American shale oil production, but they are still several dollars above where they were a week earlier.
In fact, the rise in oil prices is beginning to be felt through higher gasoline prices in the United States. Pump prices had been expected to fall after Memorial Day, as refiners cranked up production. Now, though, it appears that gas prices will be somewhat more expensive.
Overall, stocks held their ground in the latest session. Another tug-of-war may be on tap for Friday, when little fresh economic data are due to be published. - Robert Mitkowski
At the time of this writing, the author did not have positions in any of the companies mentioned.
12:10 PM EDT - Traders appear to be engaging in a bit of healthy profit taking today, even as they digest some favorable economic reports. After a slightly positive open, the Dow Jones Industrials, S&P 500, and NASDAQ are all showing modest declines at 12:00 EDT.
Investors were largely relieved that the Federal Open Market Committee (FOMC) did not veer from its anticipated course following its two-day meeting. Namely, it confirmed yesterday that the federal funds rate would likely stay near zero until next year, and that it would continue to moderately scale back its bond-buying program.
Today, market participants were greeted with more positive news. The U.S. Labor Department reported that the number of workers filing initial claims for unemployment benefits decreased by 6,000 last week, to a seasonally adjusted 312,000, which was slightly better than consensus estimates. Meanwhile, the Conference Board announced that the leading economic index for the U.S. was up 0.5% in May, which was in line with expectations. This compared to 0.3% growth in April (down from a prior estimate of 0.4%). Less closely watched, though nonetheless positive, was a report from the Philadelphia Fed indicating that its manufacturing index for June was up 15.6% sequentially, to a reading of 17.8. This marked the highest level for the index since September of 2013.
At the noon hour in New York, the broad-based S&P 500 is faring the best among the major indexes, hovering at just a point or two below the previous day’s close. Meanwhile, the blue chip Dow Industrials and tech-heavy NASDAQ have retreated by about a quarter percent each for the session so far.
Over in Europe, stocks started the day with a solid opening in the wake of yesterday’s benign pronouncements from the FOMC and maintained their positive demeanor throughout the afternoon. As of 12:00 EDT, Germany’s DAX and France’s CAC-40 are leading the major bourses with gains of about three-quarters of a percentage point each. London’s FTSE isn’t very far behind, however, advancing about half a percent on its session. – Mario Ferro
At the time of this article’s writing, the author did not have positions in any companies mentioned.
Stocks to Watch from The Survey – There’s a bit of earnings news to be aware of this morning. One of the bigger winners, at least early on, appears to be BlackBerry (BBRY). That stock is up sharply in the premarket, after the smartphone maker reported a smaller-than-anticipated loss in the May period, along with better-than-expected revenues. Other equities moving higher ahead of the bell on earnings news include Jabil Circuit (JBL), a supplier of turnkey manufacturing services for circuit board assemblies and systems, and Red Hat (RHT), a provider of open source software solutions.
It was not all good news, however, as drugstore operator Rite Aid (RAD) delivered lackluster May-period results, causing its stock to move modestly lower ahead of the bell. Investors were even more disappointed with Pier 1 Imports (PIR), as the retailer of decorative home furnishings released weaker-than-expected May-quarter results and cut its guidance. PIR is indicating a notably weaker opening this morning, as a result.
Elsewhere, on the M&A front, shares of Measurement Specialties (MEAS) are up sharply in the premarket, after the precision instruments company agreed to be acquired by TE Connectivity (TEL), a provider of electronic components, network solutions, and wireless systems, for $86 a share in cash. – Matthew E. Spencer
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell - The stock market paused for much of the session yesterday, taking a breather from three days of generally muted gains. That brief comeback, which carried the leading averages slightly higher, on balance, followed a short reversal over the prior several sessions on concerns about spreading violence in Iraq, Afghanistan, and Ukraine.
The flat-to-lower market into yesterday's mid-afternoon reflected the caution on the part of nervous investors ahead of the 2:00PM (EDT) conclusion of the Federal Reserve's latest Federal Open Market Committee (FOMC) meeting. Expectations had been that the bank would continue to taper its monthly bond buying and suggest that it would keep short-term interest rate near zero percent for some time yet.
And, in fact, investors banking on just such an outcome, were not surprised as the Fed did what the consensus had forecast that it would, namely to further reduce its bond purchases, maintain its present interest-rate structure, and indicate that it was in no hurry to shift gears. Once that benign announcement came out, stocks rallied. But that subsequent upturn, we sense, was more a sign of relief that there were no major surprises from the latest FOMC meeting--just some nominal fine tuning--than a renewal of optimism about pending Fed policies. Still, the late gains were clearly fulfilling for the bulls and suggested that investors were still seeing the glass as half full rather than half empty. The latest session, with its focus on the Fed, also lessened the obsession, at least for one day, regarding the eroding situation globally, most notably in Iraq.
Thus, the equity market stepped out on a somewhat more bullish note during the final two hours of the trading session, with the Dow Jones Industrial Average, at one point in the red by some 50 points, moving out to a progressively larger gain following the meeting's conclusion. The blue-chip composite finally ended the session with an advance of 98 points. The Standard and Poor's 500 Index, meantime, in and out of the black throughout the morning and early afternoon, closed the trading day with an increase of 15 points, while the technology laden NASDAQ ended matters ahead by 26 points. The small-and mid-cap indexes also pressed higher, but modestly so, as the bulls had one more notch to add to their investment belts. Leading the way were the interest-sensitive utilities and the basic materials, where the steels put in a strong session for a change. Gaining stocks, meantime, held a comfortable lead over declining issues in an altogether satisfying day for those long equities.
As to other matters, there are still concerns about the Middle East, most notably Iraq, while unsettling events in Ukraine persist, and that is never a good thing given the already fractious relationship between the United States and Russia. The deterioration in that corner of Eastern Europe is, of course, felt most acutely by Western Europe, given the Continent's greater proximity to that troubled area.
Looking ahead, and following the latest FOMC meeting and the earlier mixed aggregate reports on industrial production, factory use, consumer price inflation, and housing starts and building permits, somewhat weary equity investors can look forward to a rather quiet two days, at least as far as additional economic reports are concerned, although we are scheduled to get data on the leading indicators in about an hour from now. Expectations are that this gauge of business activity will show an increase of some 0.6% for May; in April, this metric had increased by 0.4%.
Meantime, a new day has arrived, and stocks across the world in Asia were mixed overnight, with Japan's Nikkei hitting on a four-month high, while equities were lower in China. In Europe, meantime, relief that the Fed was continuing its accommodative ways and that it was in no hurry to raise interest rates helped lift the bourses on the Continent this morning. As to our futures, they are pointing slightly higher, as the bulls seem set to perhaps continue yesterday's rally. – Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.