After The Close - The stock market opened higher this morning, then pulled back briefly, but managed to make some selective progress in the afternoon. Traders continued to hope that a trade deal between the U.S. and China could be reached in the near future. However, given the history of setbacks on that front, many on Wall Street are likely viewing the situation with some caution. At the end of trading today, the Dow Jones Industrial Average was ahead 109 points; the broader S&P 500 Index was up seven points; and the NASDAQ was higher by 14 points. Market breadth was constructive, as advancers outnumbered decliners by a comfortable margin on the NYSE. The services, financials, and healthcare issues moved higher, while the conglomerates and technology names lagged the broader market.
Meanwhile, it was a light day for economic reports. However, the University of Michigan’s Consumer Sentiment survey settled to a final reading of 96.8 for the month of November. This showing was quite strong, and suggests that the consumer remains in good shape. This may reflect the nation’s strong job market and vibrant corporate outlook.
In the corporate arena, many retailers continue to weigh in with their results. Today, shares of The GAP (GPS) rose in price, after the apparel retailer delivered a solid report. In addition, shares of The Buckle (BKE) moved dramatically higher, as investors were clearly pleased with that company’s report.
Technically, the stock market continues to perform well, and barring any major reversals, the averages are on track to close out 2019 with substantial gains. Many traders may be wondering why stocks have been advancing at their current pace. For one, the domestic economic outlook remains healthy, and new technology will lead to advances in many areas, including computing, automobiles, healthcare, finance, etc. Further, with some sluggishness overseas, the U.S. market seems promising. Finally, the Federal Reserve’s low interest-rate policy has likely made fixed-income investments a bit less attractive. – 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 - The stock market, a casualty of the trade standoff with China on Wednesday, began the session yesterday with additional losses. In all, after the first hour of trading, the 30-stock Dow Jones Industrial Average was lower by 105 points; the S&P 500 Index was off by 13 points; and the tech-driven NASDAQ was in the minus column to the tune of 37 points. The setback came as traders digested the latest news and rumors surrounding the U.S.-China trade impasse. Among early decliners was the stock of Alphabet (GOOG), the parent of Google. Also suffering were the shares of Macy's (M), which fell after the department store cut its forecast.
Macy's blamed several factors for the disappointment and the stock's setback, including the slow onset of cold weather across much of the country this fall, soft international tourism, and the underperformance by certain malls. Retailing results have been mixed to date, with several clear winners and a group of companies that have materially lagged. The market would continue to ebb and flow in the minus column until the noon hour and commence the afternoon with modest losses in the range of 50 points on the Dow and 33 points on the NASDAQ. As before, it remained largely about trade.
In other news, the National Association of Realtors reported yesterday that sales of existing homes edged up 1.9% in October, a slight recovery from the declines registered in September. In all, sales totaled 5.46 million homes sold on an annualized basis. Still, sales were ahead 4.6% from the year-earlier pace of transactions. Expectations for the latest month had been for the sale of 5.50 million homes. So, this was fairly well in line with the consensus. As such, the results did little to shake up things on Wall Street. In the meantime, data on new home sales will follow on Tuesday, along with the monthly survey on consumer confidence.
Meanwhile, the stock market did little as the afternoon continued, with the major indexes remaining in the red, albeit modestly, into the final hour of trading. Doubts about progress on the trade front continued to be the main factor holding back traders. The passing of a pair of bills by the House of Representatives to back the protesters in Hong Kong didn't help matters, and that also kept sentiment weak. But the selloff was never significant, and the market stabilized late in the day, concluding with modest declines in the major composites.
In all, on a day in which declining stocks held a lead on advancing issues, the Dow Jones Industrial Average would ease by 55 points; the S&P 500 Index would fall five points; and the NASDAQ would drop by 21 points. The small-cap Russell 2000 would descend by eight points. Rising on the day would be the yield on the 10-year Treasury note, which climbed to 1.77%. Looking ahead to the new day now, we will get data from the University of Michigan on Consumer Sentiment. A slight easing in sentiment is the consensus forecast.
As to the new day, we see that stocks in Asia were mixed to higher in the overnight hours, while in Europe, the leading bourses are trending upward at this hour. Also of note, Treasury yields are off slightly; oil prices are down a little; and the U.S. equity futures are pointing to a higher start when trading resumes this morning as investors monitor the trade standoff. - Harvey S. Katz, CFA