After The Close - Following a soft open to Tuesday’s session, the major market averages rose into positive territory, where they remained for most of the remainder of the day. A rebound by tech stocks, led by Apple (AAPL – Free Apple Stock Report) and Microsoft (MSFT – Free Microsoft Stock Report), helped to offset lingering uncertainty surrounding international trade dealings. Tomorrow, the former is set to introduce a slew of new products. Overall market breadth was largely indecisive, however, with the observance of Rosh Hashanah contributing low volume and a relative scarcity of political updates.
The tech-laden NASDAQ boasted the widest gain, with Netflix (NFLX), Facebook (FB), and Twitter (TWTR) among those that enjoyed sizable run ups in value. But the S&P 500 and Dow Jones Industrial Average were similarly solid during the afternoon hours. The small-cap Russell 2000, meanwhile, was more mixed, finishing the session around its breakeven line. In addition to technology, energy and telecommunications stocks exhibited meaningful leaps in aggregate value, while noncyclical consumer goods and basic materials issues wrapped up the day in negative territory.
Elsewhere, the intensifying power of Hurricane Florence gave domestic crude oil prices a significant bump today. Potential closures related to the storm, which is set to make landfall in about two days, could theoretically help drive U.S. crude prices even higher in the coming days and weeks. Accordingly, shares of Exxon Mobil (XOM – Free Exxon Mobil Stock Report) and Chevron (CVX – Free Chevron Stock Report) were among the strongest performing Dow components.
Looking ahead, we suspect trade volume and updates on the geopolitical front to accelerate in the coming days. The United States is embroiled in trade negotiations with China, Japan, and Canada, among many others, with the first-mentioned nation looking to reciprocate recent U.S. sanctions with tariffs of their own. The business beat ought to hold some influence over trading, too, as reports on producer and consumer prices will offer some insight into the monetary policy of the Federal Reserve. Stay tuned. – Robert Harrington
At the time of this article’s writing, the author did not hold positions in any of the companies mentioned.
Before The Bell - The U.S. equity market started the new trading week in rather nondescript fashion. Indeed, for much of the session, the major equity indexes never strayed too far from the neutral line on a day where the undertone to trading was modestly bullish. The broader S&P 500 Index and the tech-heavy NASDAQ were in positive territory for most of the day, finishing with respective gains of five and 22 points. The Dow Jones Industrial Average, however, recorded a loss of 59 points.
Weak performances yesterday from the stocks of industry giants Boeing (BA - Free Boeing Stock Report), UnitedHealth Group (UNH - Free UnitedHealth Stock Report), and Apple (AAPL - Free Apple Stock Report) weighed on the Dow 30. In particular, Apple stock started the session lower and stayed in negative territory, with a report before the market opened stating that President Trump is urging the technology giant to move a good deal of its iPhone manufacturing back to the United States behind the selling. The message from the Administration, which is mired in a trade dispute with China, hurt Apple stock more than the overall equity market, as many Wall Street pundits estimate that such a move would increase production costs significantly and also lead to a jump in iPhone prices in the retail market.
In general, it was a modestly positive day for stocks yesterday. Advancing issues led decliners by a comfortable margin on the New York Stock Exchange, while the scale was slightly tilted in favor of winning issues on the NASDAQ. There also were more up than down arrows among the 10 major equity groups, with the leadership coming from the economic-sensitive industrial and consumer discretionary sectors. The higher-yielding equity groups also rebounded from Friday’s setback on fears of higher fixed-income rates going forward.
The lack of any big swings in trading on Monday may have been the product of a dearth of news from both the business beat and Corporate America yesterday. Likewise, the landscape was quiet on Capitol Hill, as many government agencies were closed for the observance of Rosh Hashanah. It will be a similar story today as the Jewish holiday continues. There are no notable reports on the economy scheduled to be released, and we are still more than a month away from the commencement of third-quarter earnings season.
Meantime, the attention of the investment community has turned to international trade dealings. The investment community awaits action from President Trump after the expiring of a deadline for public comment on additional tariffs on goods from China. Earlier this morning, reports surfaced that China will ask the World Trade Organization for approval to impose sanctions on the United States, for Washington’s non-compliance with a ruling in a dispute over U.S. dumping duties that China initiated in 2013. Later this week, part of the investment community’s focus will be on the business beat, with reports due on producer (wholesale) and consumer prices, retail sales, and industrial production. The pricing data, on the heels of last week’s largest increase in the average hourly wage since mid-2009, are expected to be highly scrutinized for more clues about inflation, which is likely to play a big role in just how hawkish the Federal Reserve is with monetary policy. Our sense is that the market has already built two more 25-basis-point interest-rate hikes this year into its valuations, so the sentiment about how aggressive the central bank may be in 2019 will likely have more of any impact on stocks over the next three months.
With less than an hour to go before the start of the new trading day stateside, the equity futures are indicating some selling when the U.S. equity market opens. So far overseas, trading has been bearish, save for a nice move higher by Japan’s Nikkei 225, with the aforementioned global trade worries the primary culprit behind the selling. There also was some news from the United Kingdom. Of note, the pound sterling is hovering near a five-week high on hopes of a United Kingdom/European Union deal over Brexit. Stay tuned. - William G. Ferguson