After The Close - The market started trading lower today, on talk that President Trump and President Xi of China have pushed back any meeting until April. This was generally seen as a sign that more work on the potential U.S. and China trade agreement needs to be completed. The Dow Jones Industrial Average fell by as many as 82 points in the early portion of the session, while the other indices moved lower in tandem. However, the market quickly reversed course near 10 AM EDT, trending upward and making back all of the early losses. Then, it continued this path forward by heading to new daily highs, though it should be noted that these were only slightly above the previous close. The rest of the day could be characterized as mostly sideways trading. All told, the Dow Jones Industrial Average closed higher by seven points, the S&P 500 was down by two points, and the NASDAQ fell almost 13 points.
Though market breadth was moderately positive early in the day, with advancers outpacing decliners by a 1.3-to-1.0 ratio, it closed favoring neither side. Financials were among the best performers on the day, aided by higher interest rates, while materials equities were among the weakest.
In commodity news, crude oil prices rose as supply cuts due to sanctions on both Iran and Venezuela caused an increase in price. Also, U.S. Treasury Bond yields were higher as a flight from the safe-haven asset occurred. The VIX Volatility Index stood just below breakeven, suggesting that today’s trading had little impact on demand for options protection.
Looking ahead, the market will have a slew of economic data released tomorrow, including the Empire State Manufacturing number for March. In addition, capacity utilization and industrial production for February are slated for release, while the University of Michigan Consumer Sentiment Index will report its preliminary March figure. On the other hand, the earnings front is expected to be quiet. This suggests economic data and any news concerning a potential U.S. trade deal with China will guide tomorrow’s trading session. - John E. Seibert III
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 moved ahead briskly in early dealings yesterday, propelled ahead by a modest rally attempt in shares of suddenly pressured Boeing (BA – Free Boeing Stock Report). The member of the Dow Jones Industrial Average rose following back-to-backs setbacks induced by the tragic crash over the past weekend of one of its 737 MAX 8 airliners. Helped a little by the comeback in Boeing, the stock market pushed ahead nicely, with the Dow sporting an early triple-digit advance. The other large-cap indexes rose in concert, along with the smaller-cap composites, as Wall Street sought to recover from an early March bout of profit taking.
Because of the weakness this week in shares of that aerospace and defense giant, the Dow was up less than half a percentage point for the week going into yesterday's midweek session. By comparison, gains of almost two percent had been logged by the S&P 500 and the NASDAQ. Also of note, the government earlier in the day reported that orders for durable goods were up a modest 0.4% in January. That gain, meantime, was materially better than the 0.7% drop that had been forecast. The big improvement came from a large increase in the volatile aircraft category. Business investment also rose in the month.
That economic strength, which ran counter to some other releases, most notably the report of just a 20,000 gain in non-farm payrolls during February, helped to lift the market nicely in the morning. And these gains continued for the balance of the first half of the trading session, with some momentum even building up along the way. Meanwhile, in addition to Boeing, the tech sector rose again, as it had on Monday and Tuesday. The tech group was led by another advance in the semiconductor stocks. But it was the large, high-profile technology stocks that led the way higher.
Encouragingly, the market headed higher even though British lawmakers rejected Prime Minister Theresa May's Brexit divorce deal for a second time. This most likely assures that the proposed late-March departure from the European Union will be delayed. And, as noted, the market continued to build momentum, with the Dow climbing up to a gain of just over 200 points as we reached the noon hour in New York. Based on the morning's trading pattern, we seemed to be setting up for a very strong full-day equity market rally.
The market's advance then strengthened for a time into the early to mid-afternoon, before backtracking after the President joined a chorus of other nations in halting flights of the Boeing 737 MAX 8 airliner. That breaking news caused the Dow to lose almost all of its 220-point midday advance. But the dip, which saw the Dow briefly lose all of its session advance save for about 30 points, was very brief, and as we entered the final trading hour, the upturn, less Boeing, would then resume, carrying the Dow back up to a triple-digit gain on the day.
By the close, the averages were back up solidly in the black, with sizable, but not session-high gains. All told, the Dow would climb 148 points; the S&P 500 would end ahead by 19 points, reaching a high-water mark for 2019, in the process; and the NASDAQ would forge ahead by a solid 52 points. Advancing stocks, meantime, held a comfortable lead on declining issues. In other news, Treasury note yields edged up on the day and the price of oil jumped on dwindling available supplies. Taken as a whole, it was a good day to be long equities and commodities, as the basic materials stocks also rose nicely.
Looking ahead to a new day now, and as we always do, we cast our eyes across the world to see that stocks in Asia were mixed in the overnight hours, on weak data out of China, while in Europe, the key bourses are trading in a somewhat higher pattern. Also of note, oil prices are edging up slightly after gains yesterday and the yield on U.S. Treasury notes are little changed. Finally, the U.S. equity futures are signaling a slightly higher open on Wall Street this morning. – Harvey S. Katz, CFA