After The Close - Stocks opened higher today, and managed to maintain these gains through much of the afternoon. At the close of trading, the Dow Jones Industrial Average was ahead 260 points; the broader S&P 500 Index was up 27 points; and the NASDAQ was higher by 72 points. Market breadth showed broad-based support for equities, with advancers easily outpacing decliners on the New York Stock Exchange. All of the major market sectors made progress, with sizable gains in the technology and financial issues. While still nicely higher for the day, some of the consumer names lagged the broader market.
Meanwhile, there were no major economic reports released this morning. Tomorrow will be a light day for economic news, as well. However, the pace should pick up on Wednesday, as the Producer Price Index for the month of August is due out. The Consumer Price Index will follow of Thursday. In addition to the forthcoming corporate and economic news, traders were also busy keeping an eye on the weather. They were likely relieved that hurricane Irma did not impact Florida and the surrounding areas as badly as some had feared. Of note, shares of insurance companies reacted favorably today, as a result.
Finally, few corporations delivered their financial results over the past 24 hours. However, some stocks moved on company specific news. Of note, shares of Teva Pharmaceuticals (TEVA) surged in price after the drug company announced that it has secured a new CEO. Elsewhere, shares of Equifax (EFX) slid further, as investors remain concerned about the data breach that was reported last week.
Technically, today’s rally positions stocks nicely higher. The Dow Jones Industrial Average is above the 22,000 mark, and the S&P 500 Index inched closer to the 2,500 level. - Adam Rosner
At the time of this article’s writing, the author had a position in Teva Pharmaceuticals (TEVA).
11:45 AM EDT - The bulls got off to a roaring start this morning, as investors—after a sluggish trading week to start the month—jumped back into riskier equities. The flight away from safety is being fueled by some relief that the fallout from Hurricane Irma this weekend will probably be less than expected and news that North Korea did not test another missile this past weekend when it celebrated its anniversary as an independent country.
Thus, as we move closer to the noon hour on the East Coast, all of the major U.S. indexes are well into positive territory, with the Dow Jones Industrial Average up more than 200 points in intra-day trading. The Dow 30 and the broader S&P 500 Index are sporting their best gains since August 22nd, and the technology heavy NASDAQ, which is leading the charge upward this morning, is higher for the 8th time in the last 10 trading sessions. Overall, advancing issues are leading decliners by a sizable margins on both the New York Stock Exchange and the NASDAQ.
From a sector perspective, it is all up arrows among the 10 major equity groups. The move higher is being led by the technology sector, but we are also seeing a sharp rally in the financial stocks, which were under selling pressure last week. In the financial space, the rally is on the strength of the insurance stocks, which fell last week on the Hurricane Harvey impact and the looming threat of Hurricane Irma in Florida. But as indicated above, the fallout from Irma is looking to be less severe than expected, and, thus, we are seeing a bit of a relief rally in the insurance sector. Notable advancers include shares of Dow-30 component and insurance giant Travelers Companies (TRV - Free Travelers Stock Report) and reinsurance giant EverestRe Group (RE). Meantime, another sector in high demand today is basic materials. It should also be noted that the broadbased rally on Wall Street has even included the more defensive-oriented sectors (i.e., utilities, telecommunications, and consumer staples), which fared well last week for their defensive nature and their higher-yielding component. The latter was helped by signs that the Federal Reserve appears to be in no rush to significantly tighten the monetary reins in this low interest-rate environment.
Looking ahead to the second half of the session, it appears that it would take a Herculean task on the part of the bears to change the bullish mood today on Wall Street. The lack of any significant news from either the earnings or economic fronts has investors looking elsewhere and, hence, we are seeing the relief rally from the absence of any negative headlines from North Korea today, the expectations of a less severe financial impact from Hurricane Irma, and last week’s news that President Trump and Congressional leaders have agreed to a deal to raise the debt ceiling and avoid a government shutdown at the end of this month. Stay tuned. - William G. Ferguson
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell - The first trading week of September, a month that has historically been difficult for stocks, fittingly saw the bears hold the upper hand. It marked the first time in three weeks that the major averages finished in the red. What we also saw last week was a notable pickup in volatility. The big movement to the downside came last Tuesday, when the markets were unnerved by reports that North Korea had launched another test missile in its attempt to expand its nuclear program. That action brought a harsh response from the United States, and the escalating geopolitical tensions resulted in a 200-plus point drop in the Dow Jones Industrial Average, which investors were not able to retrace in the next three volatile trading sessions.
In addition to the North Korea drama, the U.S. equity indexes were hurt by worries about the financial fallout from the two powerful hurricanes (Harvey and Irma) to hit the United States in the last fortnight. Recovery figures being thrown around for the Hurricane Harvey damage are north of $150 billion, and the financial impact of Hurricane Irma on Florida is not yet known. These two unnerving events were somewhat offset last week by some encouraging U.S. economic data and the growing sentiment that the Federal Reserve will likely keep its accommodative monetary policies in place given the low inflation environment. The European Central Bank also said following the conclusion of its two-day monetary policy meeting last Thursday that it expects to keep its loose monetary policies in place. That pushed the euro higher versus the dollar.
From a sector perspective, the biggest laggard among the 10 major equity groups was the financial stocks. The specter of the continued low-interest environment hurt the stocks of the banks, whom earning power is weakened in such an environment, while the insurance stocks suffered notable losses, as investors worry about the impact of the damage of the aforementioned hurricanes on their balance sheets. Conversely, the higher-yielding (i.e., utilities, telecommunications, and consumer staples) issues got a boost from sentiment that the central bank will take a very measured approach with regard to tightening the monetary reins. Lower fixed-income yields make bonds less attractive, which benefits the higher-yielding equities. That group’s defensive-oriented nature also appealed to investors with the spike in market volatility last week.
Looking ahead to the new week, we will get some data on the U.S. economy, some of it will be highly scrutinized by the Federal Reserve, including data on producer and consumer prices and retail sales. We will also get a report on industrial production. Still, it is not an overwhelming amount of reports, and when coupled with a slow week for earnings, it may force the investment community to look elsewhere. Right now that is helping stocks, as the world equity markets are rallying on relief that Hurricane Irma looks to be losing strength in the United States and that North Korea's anniversary celebrations over the weekend passed without any more missile tests.
With less than an hour to go before the start of trading stateside, the U.S. equity market seems to be taking its cue from overseas, as the futures are up notably and presaging a sharply higher opening at 9:30 A.M. (EDT). That said, the situation in North Korea, the recovery from two hurricanes, and political scene in Washington D.C. are fluid and, if nothing else, may lead to a continued pick up in market volatility in a month that has been known for such activity. Stay tuned. - William G. Ferguson