After The Close - Stocks opened lower this morning, managed to cross back into positive territory around midday, but retreated again in the afternoon. By the end of trading, the Dow Jones Industrial Average was down about 96 points; the broader S&P 500 Index was off 13 points; and the NASDAQ was lower by 26 points.
Market breadth showed some underlying softness to the session, as decliners outnumbered advancers by a narrow margin on the NYSE. From a sector perspective, the technology and healthcare names displayed some relative strength, but the high-yielding utility stocks and basic materials issues weighed on the market.
There were no notable economic reports released today. The lack of information may have contributed to the session’s lackluster tone. Tomorrow will also be a light day, as the Producer Price Index (PPI) for the month of September will be the only notable report released.
Meanwhile, negotiations between the U.S. and China are set to resume this week. Given the lack of progress achieved in the past, investors may be taking a cautious view of the talks. Clearly, a favorable outcome would be a positive development for the stock market, especially given mounting concerns that the strained trade situation is now putting pressure on the economy.
In the corporate arena, traders received few profit reports this morning. Nonetheless, the third-quarter earnings season will soon be unfolding. Of note, the large banks and financial companies are usually the first names to report their numbers. Citigroup (C) is slated to weigh in with its results at the end of this week.
Technically, the stock market took a step back today, after a constructive session on Friday of last week. The S&P 500 Index is now positioned near its 50-day moving average located at the 2,940 mark. Hopefully for the bulls, this level will provide some support for stocks. - 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 most recent five-day stretch of trading on Wall Street was a wild one, to say the least. The investment community was taken on a rollercoaster, with the swings in the direction of trading rather pronounced. Investors are having to digest a slew of news both here and abroad, including reports documenting the geopolitical unrest in the Middle East and Hong Kong, the ongoing trade dispute between the United States and China, and the drama unfolding on Capitol Hill. However, last week the biggest story was the U.S. economy and that drove trading for a good portion of the five-day stretch.
For the week, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index finished in negative territory, with the damage done on Tuesday and Wednesday when the Dow 30 fell 838 points over the two-day stretch. The Dow 30 was joined deep in the red by the other two major averages and the small-cap Russell 2000. The investment community was spooked by a very weak report on September manufacturing activity from the Institute for Supply Management. The data showed that factory output fell to its lowest level since 2009. That report, along with a dour reading on nonmanufacturing activity on Thursday, raised further fears that the negative impact of the ongoing trade war is starting to be felt stateside.
That said, it was not all bad news last week for the investment community. After the aforementioned sharp selloff in the middle of the week, the equity averages staged a partial rally during the late morning hours on the East Coast Thursday when the weak services data brought sentiment that may make the Federal Reserve more likely to cut interest rates again later this month. Then on Friday, a Goldilocks report from the Labor Department didn’t squash sentiment that the central bank might loosen the monetary reins, but at the same time quelled some of the growing fears that the country is heading toward a recession. Specifically, the nation added 136,000 nonfarm positions last month, falling just short of the expectation, but on the positive side the summer payroll figures were revised higher and the unemployment rate fell to 3.5%, a 50-year low. The semi-encouraging labor data, along with commentary from President Trump that the bickering economic superpowers are making progress on a deal, emboldened investors to add more risk to their portfolios at the end of last week.
On Friday, the Dow Jones Industrials, the NASDAQ Composite, the S&P 500 Index, and the Russell 2000 rallied, with respective gains of 373, 110, 41, and 14 points. In general, it was a very bullish session for Wall Street, with advancing issues swamping decliners on both the New York Stock Exchange and the NASDAQ. Likewise, all of the 10 major equity groups finishing comfortable in positive territory, with the leadership coming from the technology and healthcare sectors, as well as the higher-yielding groups. The latter area got a boost from the drop in fixed-income yields following the jobs report. That scenario makes higher-yielding equities more attractive to income-oriented accounts.
Turning to the week at hand, it promises to be another busy stretch for Wall Street, even with the third-quarter earnings season still a week from commencing with the latest quarterly results from JPMorgan Chase (JPM – Free JPMorgan Chase Stock Report) on October 15th. Until then, the attention of Wall Street will be on all of the aforementioned events. On the business beat, we will get some reports that will be closely eyed by the Fed, including the latest data on consumer and producer pricing, ahead of its monetary policy meeting scheduled for late this month. We may also get a sense of what the central bank leaders are thinking with the release of the minutes from its September FOMC meeting. That said, all of this will take a back seat to the start of the much-anticipated trade negotiations between high-ranking officials from the United States and China later this week. The trade drama has had the biggest effect on the performance of the U.S. stock market thus far in 2019.
With less than an hour to go before the start of the new trading week stateside, the equity futures are indicating a modestly lower opening for the U.S. stock market. So far overseas, the trading has been mixed. The main indexes in Asia finished mostly lower overnight, while the major European bourses are positive territory as trading moves into the second half of the session on the Continent. As noted, all eyes will be on trade this week, and on point the U.S. equity futures are slightly lower on reports that China may now be reluctant to agree to a broad trade deal with the Trump Administration. A report by a leading financial daily said that senior officials from China have indicated the range of topics they’re willing to discuss at upcoming talks has narrowed significantly. That said, this fluid situation seems to change daily these days. Stay tuned. – William G. Ferguson