After The Close - The major U.S. stock indexes started the day on an up note, and then remained within a fairly narrow but positive range throughout the session.
On the economic front, today’s news was largely favorable. The U.S. trade gap for the month of July came in at $43.7 billion, which was better than expected. Also, the Institute for Supply Management reported that the nonmanufacturing sector continued to expand, with August’s reading coming in at 55.3. This was up from 53.9 in July. Meanwhile, investors also likely breathed a sigh of relief after President Trump and some Congressional leaders agreed to extend the debt-ceiling and keep the government funded through mid-December. Lastly, the Federal Reserve’s Beige Book summary appeared to reveal few surprises. Notably, wage pressures remained low despite tight labor markets, keeping inflation below the Fed’s two percent target and suggesting the next rate hike may be put off until next year. However, there is growing concern over further declines in U.S. auto sales.
At the closing bell, the 30-stock Dow Jones Industrial Average ended the day with a gain of 54 points, the broader S&P 500 was ahead eight points, and the NASDAQ rebounded from a late morning dip into the red to finish up by 18 points. Nearly all of the 10 major market sectors put in a good showing today, led by energy stocks which pushed ahead 1.3%. Much of that appeared to be driven by gains in light sweet crude prices, which were up a little less than one percent to just over $49 per barrel. At the other end of the spectrum, utilities shed a little over one-third of a percentage point.
Trading was more mixed on the European bourses today. Germany’s DAX was up three-quarters of a percent while France’s CAC-40 moved ahead by one-third. The U.K.’s FTSE bucked the trend, however, falling by a quarter of a percentage point. - Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
12:00 PM EDT - The U.S. stock market is putting in a mixed showing today. At roughly noon in New York, the Dow Jones Industrial Average is ahead 65 points; the broader S&P 500 Index is up four points; while the NASDAQ is lower by 10 points. Market breadth is favorable, as advancers are ahead of decliners on the NYSE by some five to three. From a sector perspective, the energy and financial stocks are displaying some leadership, while the technology names are weighing on the market.
Meanwhile, traders received a few economic releases this morning. The results were supportive, for the most part. Specifically, the nation’s trade gap measured $43.7 billion for the month of July, which was a slightly better reading than had been anticipated. In addition, the ISM nonmanufacturing index came in at 55.3 for the month of August, which was a solid improvement over the July figure. Elsewhere, this afternoon the Federal Reserve’s Beige Book summation for the month of September will be released, and that item will likely receive some attention, given traders concerns about monetary policy. Tomorrow will be a somewhat busy day for reports, with the latest weekly initial jobless claims due out.
Finally, a handful of companies weighed in with their financial results over the past 24 hours. Specifically, shares of Hewlett Packard Enterprise Company (HPE) are sagging today, even though the technology solutions provider delivered a respectable release. Meanwhile, shares of Navistar International (NAV) are trading higher, after the automotive company posted better-than-anticipated results.
Technically, stocks had made some progress until yesterday. In all, despite a mixed showing today, the S&P 500 Index is still above its 50-day moving average, located at the 2,450 level. It remains to be seen how stocks will perform in the weeks ahead, as the summer ends and the corporate pace picks up. - 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 - Investors awoke yesterday following what we hope was a safe and enjoyable Labor Day Weekend to find stocks selling off broadly and sharply as we moved into a new trading week on Wall Street. And the problems were not stateside, in the main, although there were the continuing ravages and costs associated with Hurricane Harvey to deal with, the approach of a second storm, Hurricane Irma, to worry about, and ongoing problems in Washington, such as the debt ceiling. Rather, the matter vexing the Street was off shore--specifically related to North Korea and its nuclear threats, which were increasing by the day.
So, Wall Street sold off badly, with the morning's drop deepening as the hours evolved. In fact, as we passed the 90-minute mark of trading, the Dow Jones Industrial Average was off some 175 points, with few buy programs to break the slide, even momentarily. The other averages, too, were weak, but the Dow, with its global sensitivity, given its multinational makeup, was disproportionately hurt than the other indexes. And on that composite, two weak links were financial services giant Goldman Sachs (GS - Free Goldman Sachs Stock Report) and the highly diversified United Technologies (UTX - Free United Technologies Stock Report), with the latter issue off more than 4% in late morning.
In all, as we approached the noon hour in New York, North Korea's test of a hydrogen bomb, which can be mounted onto an ICBM missile, was creating all sorts of havoc on Wall Street, with the Dow still off by 160 points, following a morning-worst deficit of more than 185 points. Conversely, there was selective strength in the defensive groups, notably the food processing stocks, after a bout of selling in that equity category over the past couple of weeks. Overall, the setback was severe, with twice as many stocks losing ground as gaining, while just about all of the major equity groups were in the red at that time.
Things only got worse as we moved through the lunch hour, as the Dow plummeted to a session-worst deficit of almost 290 points. Moreover, the NASDAQ and the S&P Mid-Cap 400, both late to the day's bearish festivities, started to falter even more, with the former falling to a loss of 100 points, or more than 1.5%. As earlier in the day, it was worsening fears about the outcome of the nuclear standoff with North Korea that had investors on edge. Some spotty, half-hearted, buying surfaced to trim the day's losses somewhat, but there was never any serious thought of a late-day rally of any consequence.
Meantime, while North Korea was the leading issue for investors to fret about, it was not the only one, as budget negotiations and the need to raise the debt ceiling were on the minds of many traders, as Washington gets back from summer vacation. Also, we are just weeks away from the time when corporate managements will be talking about third-quarter earnings. Expectations there are rather high, but should disappointments be forthcoming in sufficient numbers, sentiment may shift quickly, especially in an extended stock market, such we are in now, with stretched P/E ratios.
Things didn't get much better as we ticked down to the close and ahead of worries overnight about new tidings out of North Korea. Also, the new day will feature key metrics on non-manufacturing activity from the Institute for Supply Management. Last week, we saw a positive outcome from the companion manufacturing survey. This latter report came out the same day as the government's disappointing metrics on job growth (just 156,000 positions were added last month) and wage gains. These reports are all critical ahead of the mid-month FOMC meeting. Finally, this afternoon will bring release of the Fed's Beige Book.
All told, the day ended with a whimper, as the Dow ended off by 234 points and the NASDAQ shed 60 points, with some late buying helping there, while there were about five stocks down for every two up on the NYSE, as nearly all the major equity groups faltered, led down by the financial stocks. Looking out on a new day, we see that stocks were off a bit across much of Asia overnight, and are now tracking lower in Europe today. Also, gold is flat; oil, a big gainer yesterday, is up slightly; and Treasury yields are holding at 2.07% on the 10-year note. Finally, U.S. futures are signaling some small market gains in the hours ahead. - Harvey S. Katz, CFA