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After The Close - The futures market started positively today, as rumors of the U.S. weighing restrictions on investments in China were refuted by White House trade advisor, Peter Navarro. When the stock market opened, it continued to move to the upside, and the Dow Jones Industrial Average was higher by as many as 113 points in early action. Then, composites consolidated around these levels for a spell before making another leg higher. Indeed, the Dow rose by as many as 179 points at its apex, while the other indices rose in tandem. Still, the composites tapered off in the final portion of the session.

All told, the Dow closed higher by 97 points, while the S&P 500 was up 15 points during the last trading day of the third quarter.

Additionally, market breadth was slightly positive, as advancers outpaced decliners by a 1.8-to-1.0 ratio. Technology stocks were among the best performers of the day, while energy issues were among the weakest, hurt by a decline in the related commodity.

In commodity news, oil prices fell today, as fears about global growth occurred due to weaker manufacturing data from China. This reduced demand sentiment, while expectations rose for a quicker recovery for supply out of Saudi Arabia. Meantime, U.S. Treasury bond yields were slightly positive on the day, as demand waned for the safe-haven asset. The VIX Volatility Index was lower, as traders bought less option protection.

Looking ahead, tomorrow will have a notable amount of economic data released, which includes the ISM Manufacturing Index for September. Too, construction spending for August is on the docket. Also, a few companies are slated to report quarterly earnings results. Overall, we think that any change in sentiment concerning the U.S. trade negotiations with China and any news developments concerning the political situation at home will drive trading. - John E. Seibert III

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

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Before The Bell - The most recent five-day stretch of trading on Wall Street went to the bears. However, the losses were quite contained, as the bulls were heard from at times during the week. What we did see was a pickup in volatility in the market. Investors have historically not been big fans of uncertainty and that is what they are getting right now. There is still little clarity about how the trade talks are going between the United States and China, with the narrative seeming to change on a daily basis. Likewise, the escalating geopolitical unrest in the Middle East and Hong Kong has unnerved investors from time to time over the last month of trading. The Federal Reserve is still on the accommodative monetary policy course, which has proven supportive for equities, but even that has not been enough to keep the bears quiet.

On Friday, the markets started out on a positive note and carried those initial gains for much of the morning hours on the East Coast, but the bears emerged in the second half of the trading session and pushed all of the major averages into the red. Investors were unnerved by a report that the Trump Administration was considering sweeping limits to capital market investments, which the investment community viewed as a sign that the relationship between the world’s two-largest economies is still rather frosty and a deal could still be a ways off. The prevailing consensus on Wall Street is that restricting access to U.S. finance would amount to the United States’ most severe potential move against China, but a Treasury Department official said over the weekend that the U.S. has no plans “at this time” to stop Chinese companies from listing on American exchanges. Those jitters resulted in respective declines of 71, 91, and 16 points for the Dow Jones Industrial Average, the NASDAQ Composite, and the broader S&P 500 Index. The big laggard was the NASDAQ, as the tech-heavy index tends to sell off when trade sentiment sours. Many of the technology companies do a large amount of business in China. Overall, all of the 10 major equity groups finished in negative territory, with the technology sector not surprisingly the biggest loser. Declining issues led advancers by a considerable margin on both the Big Board and the NASDAQ, to the tune of nearly two to one on the latter exchange.

With earnings season still about two weeks away from commencing, the markets are likely to be driven by the aforementioned events, as well as the latest data from the business beat. The news on the U.S. economy has been mixed for much of this month and that did not change last week. The market moved lower after a disappointing report on consumer confidence, but was helped later in the week by a strong report on home sales, which followed encouraging data on building activity earlier this month. This week, the news from the business beat will heat up with a number of important reports due, including data on manufacturing and nonmanufacturing activity, and the much anticipated report on the labor market this Friday. The labor figures will be monitored closely by the investment community, as they may have an effect on how accommodative the Federal Reserve remains in the final months of 2019 and the early part of next year.

With less than an hour to go before the start of the new trading week and the final day of September, the equity futures are indicating a slightly higher opening for the U.S. stock market. The mood overseas has been mixed at best, with a dourer undertone to trading. The main indexes in Asia were mixed, but mostly lower overnight, while the major European bourses are modestly in the black, as trading moves into the second half of the session on the Continent. Although it is hard to predict how the market will ultimately perform today with so many variables at play, we would not be surprised if it were another volatile session. In addition to the aforementioned events, volatility may be higher due to possible lighter trading volume with the ongoing Jewish holiday and some late session window dressing as portfolio managers shuffle their portfolios ahead of the quarter’s end. 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.