After The Close - Wall Street rallied strongly today after the European Central Bank took aggressive measures to boost the region’s economy. At the close, the Dow Jones Industrial Average was up 99 points, the S&P 500 had tacked on 13 points, the NASDAQ had gained 45 points, and the small-cap Russell 2000 did especially well on a percentage basis.
In recent days, the Dow and the S&P had been inching forward into record territory, but in unconvincing fashion until the bulls took charge today. Overall, it was a good day for stocks, with the number of advancing issues swamping decliners on both the Big Board and the NASDAQ.
The main reason for the impressive advance was that the ECB took bold action to address the euro zone’s tepid business conditions by reducing its main lending rate and initiating a negative overnight interest rate for commercial banks keeping their funds at the central bank. The latter action is aimed at getting more cash circulating in the broader economy.
Granted, investors have other concerns, including violence in Ukraine and its implications for U.S. and Russian ties; China’s slowdown; and the questions about the vigor of the United States’ economy.
At least for today, those issues were less of a concern. That was despite a reduced forecast for China’s 2015 GDP growth, from 7.3% to 7.0%, by the International Monetary Fund. But a 7.0% growth rate would still be enviable, and might not rattle investors if it comes about through a ``soft landing’’.
Regarding Ukraine, President Obama’s presence in Europe this week at a G-7 conference is helping to put forth a united front by western nations against potential future incursions in the region on Russia’s part.
Tomorrow brings an important milepost in judging how well the nation’s recovery is faring with the release of the government jobs report for May. Some 215,000 positions were earlier thought to have been added, but yesterday’s private sector jobs report by payroll processor ADP of 179,000 may have reduced expectations. On the plus side, this morning’s initial weekly jobless claims suggested solid job growth. All eyes will be on Friday’s employment data, due out at 8:30 am EDT, for clues as to the economy’s direction.
Among individual stocks, Amazon.com (AMZN) fared very well after the company announced it will host a ``launch event’’ in Seattle on June 18th. The speculation is that some type of smartphone or device is in the wings. - Robert Mitkowski
At the time of this writing, the author did not have positions in any of the companies mentioned.
12:30 PM EDT - The U.S. stock market opened higher, pulled back in the first hour of trade, but is now advancing strongly. The move may reflect news from Europe. Notably, some of the bourses ended on a higher note, as the European Central Bank adopted a more accommodative monetary stance. Meanwhile, at just past noon in New York, the Dow Jones Industrial Average is up 93 points; the broader S&P 500 Index is ahead 10 points; and the NASDAQ, which is assuming a leadership role again today, is higher by 36 points. Market breadth is positive, as advancing stocks are well ahead of decliners on the NYSE. Meanwhile, it should be noted that all of the major market sectors are gaining today, and that suggests some broadbased support for equities. Strength can be found in the industrials, and the utilities, too, are moving up. While still ahead, some of the consumer issues are lagging a bit.
Overall, the broader stock market continues to extend its gains. So far, the rally that started in mid-May seems to be sustainable. It is encouraging, too, that there is broader participation in the market lately, as the small company names are attracting some buyers. Notably, the Russell 2000 is up quite a bit today. Strength in this area might suggest an improvement in speculative sentiment, which is often necessary for bull market rallies. The VIX is trading lower at 11.63 today.
The economic news released this morning was not too impressive. Initial jobless claims for the week ended May 31st, came in at 312,000, which was a bit higher than expected. However, the weekly continuing claims showed some improvement. This may have some traders speculating about the broader employment situation, and possible moves by the Fed. Notably, tomorrow morning the government’s May employment report is due out.
In the corporate arena, shares of Joy Global (JOY) are trading higher, as the mining supplies company issued decent results and investors seem pleased with the outlook. On the other hand, PVH Corp. (PVH) shares are slipping, as the apparel manufacturer put out a disappointing report. – Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Stocks to Watch from The Survey – There are a few earnings reports out today, and the biggest winner appears to be Ciena Corp. (CIEN). Indeed, CIEN stock is moving sharply higher ahead of the bell, after the telecommunications equipment company released better-than-expected April-period results and offered an upbeat outlook. Investors also took kindly to quarterly financials from discount retailer Five Below (FIVE) and mining equipment manufacturer Joy Global (JOY), and bid those stocks modestly higher in pre-market trading, as a result.
It was not all good news, however, and Wall Street took issue with April-quarter results from apparel company PVH Corp. (PVH), which missed the mark. The Tommy Hilfiger and Calvin Klein parent also trimmed its guidance, causing the stock to move moderately lower in the premarket.
Finally, news reports are out suggesting that telecommunications companies Sprint (S) and T-Mobile US (TMUS) are working on ironing out a merger deal that would value TMUS at roughly $40 a share. Both stocks are indicating slightly higher openings this morning, in response. – 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 bulls and bears danced around each other yesterday, going back and forth over course of the day with neither side managing any spirited movement in one direction or the other, although at the close, the bulls did manage to score a narrow technical win. In short, it was an atypically subdued and dull late-spring session, as investors considered the economic reports already released this week and contemplated the reports to come, especially tomorrow's data on non-farm payrolls and the unemployment rate. These latter metrics can be market moving, especially on a Friday as we approach the summer and volume is normally quite weak.
To recap, this has been a very busy week for the economy, starting out with Monday's report on manufacturing activity across the country, which showed some nice strength. Then, on Tuesday, we saw an uplifting release on factory orders. But these were just a prelude to an especially busy day yesterday. To wit, the day started out with a somewhat disappointing issuance on private-sector job creation in which fewer jobs were added last month than had been expected, although the aggregate total was reasonable. A few minutes later, the Commerce Department reported that the nation's trade gap widened notably in April. That news hurt equity futures momentarily. Then, at 10:00 (EDT), the Institute for Supply Management followed up its earlier report on manufacturing activity with one on the non-manufacturing, or services sector. Here, the data showed that this survey had climbed to its best levels of the year and slightly exceeded expectations.
Then, early in the afternoon, the Federal Reserve Bank of New York prepared and released its Beige Book summary of economic activity across the country. Here, the New York Bank, one of the 12 Fed District banks, signaled that aggregate business activity had increased at a moderate to modest pace across the country since the prior release some six weeks before. This report is then used by the Fed to help it formulate policy at the next FOMC meeting. The Beige Book release, which contained no surprises, did little to change the overall direction of the stock market, which, as noted, held slightly in the win column.
Looking at the day's action, the equity market started things slightly in the minus column, perhaps stressed out a bit by the slightly disappointing private-sector payroll survey prepared by Automatic Data Processing (ADP). However, stocks quickly made up the ground when the ISM survey, as noted, exceeded expectations. In the process, the Standard and Poor's 500 Index made one more record high, as that broadly configured composite climbed a little further above 1,900. This index, which had ranged from 1,560 to 1,925 over the past 52 weeks through Tuesday, managed to close in on 1,930. The Dow Jones Industrial Average also wound up ticking a bit higher, but fell short of a record. The other indexes also stayed slightly on the plus side of the ledger. All told, the Dow added 15 points on the day; the Standard and Poor's 500 Index rose almost four points; the NASDAQ, buttressed by a nice gain in the shares of tech icon Apple Inc. (AAPL) outperformed jumping 18 points; and the small-cap Russell 2000 rose five points. Advancing and declining stocks, though, stayed in a narrow range, which represented an improvement over Monday and Tuesday when losing stocks held a nice plurality over gaining issues.
Among individual stocks and sectors, meanwhile, we saw General Motors (GM) shares move ahead nicely, while the basic materials issues did better, led by the metals and mining stocks, which have been quite week recently, even though gold prices again made no progress as their slump drags on. On the other hand, some of the big telecoms struggled a little, as did the energy stocks; but the solar issues did quite well.
Now, as we look ahead to a new day, we find that equities across Asia were mostly in the plus column overnight, albeit marginally, while they have ticked somewhat higher in Europe thus far this morning, underpinned in the past hour by a modest cut in interest rates by the European Central Bank. The ECB cut its main lending rate from 0.25% to 0.15%. The flagging economies on the Continent made this a less surprising event than it might otherwise have been. Finally, our futures are pressing nicely higher ahead of the bell, suggesting that our equity market, which has been routinely setting new highs, could well head further into plus territory in the hours to come, although we sense that there could be some gradual hesitation ahead of tomorrow morning's employment and unemployment report. - Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.