After The Close -  Wall Street endured a major selloff today on worries that President Trump’s agenda to spur growth would be delayed, or derailed, by the potential fallout that might occur as to whether the President tried to sidetrack an FBI investigation. At the closing bell, the Dow Jones Industrial Average was down 373 points; the NASDAQ dropped 159 points; and the S&P 500 slumped 44 points. The downturn was broad-based, with declining issues topping gainers by more than three to one on the Big Board. The final numbers were worse on the NASDAQ, the year’s big winner among the major indexes, where losers bested winners by more than five to one.

Truth be told, the market was ripe for some profit-taking, and the latest news out of Washington provided the catalyst. Stocks have enjoyed quite a run in the six months since the November election, but the news generally needs to be good for share prices to continue advancing, and today that was not the case. It could be that questions over the President’s interactions with the FBI won’t amount to much, and concerns will blow over. Spending time to determine what may have happened could push back the passage in Congress and subsequent implementation of policies being put forth by the Executive branch of government, though.

Among the stock market’s main sectors, financials and tech stocks fared the worst. Bank shares also took it on the chin as bond yields fell sharply. The hope in the investment community was that rising bond yields would lift lending margins, but that trading strategy is not working as well lately. As noted, too, the tech sector gave back some of the big gains it has achieved in 2017.  The particular weakness in technology and financial stocks was underscored by notable declines in Dow-30 components Apple (AAPL Free Apple Stock Report) and Goldman Sachs (GS Free Goldman Sachs Stock Report).

With the bulls on the run, defensive sectors, such as utilities, consumer staples, and real estate investment trusts exhibited relative strength, as did bonds and gold, in the just-ended session.

There were a few winners sprinkled in among the wave of selling. Those include shares of discount retailer Target (TGT), which reported better-than-expected quarterly results, and DISH Networks (DISH), which is reportedly in talks with Amazon.com (AMZN) over a wireless partnership.

But, it was mostly a gloomy day for investors, who will be paying close attention to developments in Washington in the days and weeks ahead. - Robert Mitkowski

At the time of this writing, the author did not have positions in any of the companies mentioned. 


12:20 PM EDT - The U.S. equity markets opened lower this morning, and have largely spent the session extending their losses. The downturn stemmed from renewed concerns over President Donald Trump's alleged discussion with former FBI director James Comey, which have prompted calls for further investigation. That, in turn, has raised questions as to whether the new administration will be able to follow through on the planned economic policy changes that have fueled the rally since the election.

As we pass the noon hour of trading in New York, the major stock indexes were still notably lower for the day. The Dow Jones Industrials were down 242 points, or 1.2%, and were on pace for their biggest dip since September of last year. The broader S&P 500 Index was also down 1.2%, while the tech-heavy NASDAQ was faring the worst of the large-cap lot, with a loss of 1.6%.

Nine of the 10 major market sectors are in the red this morning. Financial stocks, which had made large gains in the wake of November’s elections, were among the biggest decliners, shedding 1.5%. However, technology and industrial issues were showing similarly large losses. Utilities were the only group in positive territory, rising about a quarter percent.

Unsurprisingly, the CBOE Volatility Index (VIX), often referred to as the “fear index”, vaulted over 25% today, marking its largest move in eight months. (While the current reading is still fairly low by historical standards, the Index recently hit its lowest close in over 20 years.) The flight to quality resulted in increased demand for the 10-year Treasury note, pushing yields (which move inversely to price) down a few basis points, to 2.26%. Gold also saw renewed interest, with the price moving up 1.3% to $1,251 an ounce. Meanwhile, oil is also trading higher, rising 1.2%, to a little over $49 a barrel. That move followed news that U.S. stockpiles were down for a sixth straight week, further alleviating oversupply concerns.

Stocks overseas have also taken a hit, with the key European bourses solidly in the red. France’s CAC-40 suffered the worst of the lot, shedding nearly two percentage points. Germany’s DAX didn’t do much better, falling 1.4%, while London’s FTSE managed to limit losses to a quarter percent. - Mario Ferro

At the time of this article's writing, the author did not have positions in any of the companies mentioned.


10:40 AM EDT - After weeks of preoccupation with earnings, the economy, hopes for tax reform, a new health care plan, and increased fiscal stimulus, a generally rising stock market has hit a wall early today. And the cause is not a direct reversal in any of these areas--at least not yet--but rather concerns in Washington that could lead to an eventual diminution in efforts in the latter three areas.

On point, after news surfaced late yesterday that President Trump had allegedly asked then FBI director James Comey to back off an investigation of former National Security Michael Flynn, the market eased back in Asia in the overnight hours and in Europe early today. And on our shores, after a selloff in the pre-market hours in the equity futures, our stock market plummeted at the open, with the Dow Jones Industrial Average falling by some 240 points.

The logical fear is that should this situation worsen for the President, major delays to adopting tax reform, health care revisions, and fiscal spending initiatives could lead to a major selloff in the equity market. That is because much of the market strength has been based on hopes for policy adoptions in each area.

So, stocks are falling back, with the Dow off 230 points; the S&P 500 Index lower by 25 points; and the NASDAQ down by 76 points. Even larger percentage losses are being sustained by the S&P 400 and the Russell 2000. - Harvey S. Katz

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, which started the week on a decided up note with solid across-the-board increases on Monday, began yesterday as though it would make it back-to-back wins for the bulls. But that upbeat tone lasted less than an hour, and as we reached the midpoint of the morning, nearly all of the composites, both large and small, were lower. But as has been the case so far this year, though, the bears could not make a meaningful stand, and as we reached the noon hour in New York, the bulls were making a second rally attempt.

Behind the up-and-down sequence was some solid earnings data from Dow Jones Industrial Average mainstay The Home Depot (HD - Free Home Depot Stock Report), some mixed economic metrics, and a few new worries in Washington. On point, reports issued early yesterday showed that both housing starts and building permits had backtracked sequentially during April, although each was higher on a year-to-year basis. However, the overall totals pointed to further resilience in this core economic sector.

Then, 45 minutes later, the government reported greater-than-expected gains in industrial production and factory utilization during April. The output rise of 1.0%, in fact, made it three months in a row that this metric had shown improvement. This strong performance supports our contention that the nation's gross domestic product, a scant 0.7% gainer in the opening quarter, may increase by 3% in the current term. Then, there is Washington, where hopes for tax reform are so far helping to offset worries about seeming missteps by the Administration.

Through it all, though, the aging bull perseveres. And that was the case again yesterday. So, after some early gains and subsequent backtracking, the stock market steadied itself into the early afternoon, with the NASDAQ moving comfortably back into the black, while the Dow and the S&P 500 stepped gingerly into the red. But again there was little in the way of downside momentum, so the averages again stayed in a tight band, which has been the pattern for the past three weeks, or so. 

It seems as though with tax reform possibilities still alive, the market can withstand most headwinds. Also, with earnings continuing on the upswing (save for a few celebrated misses in the retail sector), and the economy still mostly supportive, the market can head irregularly higher, as it continues to do, even with valuations so extended. At least that is the case for now. And this resilience held again yesterday, for the most part, as we moved further into the afternoon.   

The market then tightened its range somewhat as we neared the close, and when the final numbers were in, we saw a mixed market. Specifically, the Dow and the S&P 500 were off nominally, while the NASDAQ was sporting a string 20-point advance. Then small- and mid-cap indexes were mixed, while the various equity groups and the advance-decline line were also on a divided path. All in all, the market treaded water on this second day of the trading week.   

Looking out at the middle day of the week now, we see that the markets across Asia were lower overnight on the latest political news regarding the Trump Administration, while on the Continent, the principal European bourses are pushing downward on U.S. political concerns so far this morning. Elsewhere, oil is trading higher in New York dealing thus far; Treasury note and bond yields are lower; and U.S. equity futures are signaling a materially weaker opening when trading resumes in less than an hour. So, after a strong Monday and a mixed Tuesday, the market could well do some backtracking in the hours to come.   - Harvey S. Katz  

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.