After the Close - The U.S. stock market opened lower today, and remained off sharply for most of the session. However, the market was able to reverse course to some degree as the close neared. At the end of the day, the Dow Jones Industrial Average was off 25 points (-0.2%); the S&P 500 Index fell three points (-0.3%); and the NASDAQ, which led the averages lower, shed 26 points (-0.9%). The market’s breadth actually ended positive, with advancing stocks outnumbering decliners by a small margin on the NYSE. Some of the market’s sectors ended in negative territory, with the weakness concentrated in the technology, financials, and basic materials issues. Meanwhile, there were gains in the utilities, energy, and consumer areas.
Technically, the S&P 500 has been quite volatile, which suggest that sentiment is divided. No doubt, the confusion may stem from the constantly shifting reports out of Europe, somewhat spotty economic releases on our shores, and concerns about the upcoming second-quarter earnings season. For the most part, the S&P 500 Index has not been able to sustain a significant rally, but there seems to be some support at the 1,310 level, which has held on numerous sessions. Also, the late-day buying was also good to see.
Today’s economic news was not too exciting. Initial jobless claims for the week ended June 23rd came in at 386,000, which was about what many had expected. The first-quarter final GDP reading came in at 1.9%, which also met the consensus view. It should be noted that the Supreme Court voted to largely uphold President Obama’s Affordable Care Act, which was a widely-watched news item, having implications for the broader economy and selected stocks. Tomorrow, we get a look at personal income and spending levels for the month of May, as well as a manufacturing report for the Chicago region and the University of Michigan’s final reading on consumer sentiment for June.
Meanwhile, the corporate news was mixed. Shares of JPMorgan Chase (JPM – Free JPMorgan Stock Report) were off a bit, on reports concerning recent trading losses. Shares of AOL (AOL) were up sharply, as that company is repurchasing its stock in a tender offer.
Elsewhere, the problems in Europe do not seem to be going away anytime soon. The major bourses put in a weak session. Traders remain pessimistic about the summit meeting there. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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12:20 PM ET - Stocks are trading sharply lower today on uninspiring economic data, following the broader trend that has been in place for the past couple of months. Just after noontime on the East Coast, the Dow Jones Industrial Average was off 127 points and the NASDAQ was down 39 points. Decliners lead advancers by more than a two-to-one margin on the New York Stock Exchange.
The day started out with slightly disappointing news regarding the employment situation in Germany. That contributed to a general selloff on the European bourses, creating a weak overall backdrop. Expectations are also muted for the summit for European leaders that began today. Those pushing for Eurobonds as a quick fix to the region’s problems will almost certainly be disappointed. A lot more integration toward a fiscal union needs to be achieved before Eurobonds can become a reality. In the meantime, Europe’s leaders will presumably need to keep putting out fires on a country-by-country basis.
Back home, the morning’s business news provided further evidence that the economy is in a slow-growth mode, with little change in initial unemployment claims and reported first-quarter GDP of 1.9% going unrevised. That disappointed stock market investors looking for a faster pace of growth to spark corporate earnings.
At the sector level, shares of financial companies are feeling the worst part of the selling. Sentiment toward the group has been hurt by revelations that Barclays Bank (BCS) of Britain manipulated the London interbank offered rate (LIBOR) used to determine interest rates on a wide variety of loans. Word that JPMorgan Chase’s (JPM - Free JPMorgan Stock Report) trading losses could escalate notably is another negative.
Technology stocks are also having a hard time, with shares of big-name companies such as Microsoft (MSFT - Free Microsoft Stock Report), Intel (INTC - Free Intel Stock Report), and Cisco Systems (CSCO - Free Cisco Stock Report) lagging.
Meanwhile, healthcare stocks are trading in line with the market after the Supreme Court’s decision to uphold the Affordable Care Act’s mandate that individuals carry health insurance, but with some notable variation. Hospital stocks, including Community Health Systems (CYH) and Tenet Healthcare (THC) are higher on the prospect of gaining customers. Shares of commercial insurer WellPoint (WLP) are lower, though.
On the whole, this morning’s selling seemed excessive, given that the day’s economic news, while hardly exciting, was not terrible, either. Some of the volatility could be due to end-of-quarter selling by portfolio managers looking to lock in gains. For now, the market is off its worst levels of the session, and it is still possible that bargain hunters could step in to shore up trading this afternoon. - Robert Mitkowski
At the time this article was written, the author did not have positions in any of the companies mentioned.
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11:15 AM ET - The on again, off again equity market rally is decidedly off again this morning. In fact, as we pass the 90 minute mark of the new trading day along the East Coast, we find that the Dow Jones Industrial Average, which has been in negative territory all morning, is now off by 150 points, placing that index at just about its low for the session. This latest setback follows a sharp 138-point retreat on Monday and back-to-back recoveries on Tuesday and Wednesday, which had combined to just about offset the initial Monday decline noted above. Now, though, the market is tumbling across a broad front.
In addition to the Dow, we are seeing sharp declines in the NASDAQ (off 43 points), in the Standard and Poor's 500 Index (off 15 points), and in the S&P Mid-Cap 400 Index (lower by 10 points).
Several things seem to be weighing on the market so far today. For one thing, Europe's leaders are meeting this morning, in a key summit that is designed to address the flagging economic and financial situation in the euro zone. Expectations are very low that this confab will lead to much in the way of solving any of that region's wide-ranging ills.
Now, in the last half hour, the much-anticipated ruling by the U.S. Supreme Court on the constitutionality of the Affordable Care Act has been handed down. In its ruling, the Court has upheld the individual insurance requirement in President Barack Obama's health care overhaul. This is the most controversial part of the legislation, and the one piece that opponents of the new law have been hoping would be overturned. Some other parts of the bill have been upheld, other parts turned down--especially the expansion of Medicaid. We sense that the debate on the outcome of the law will be held on Wall Street for some time, and it is probably too early to make a definitive judgment as to the ultimate effect of the Court's decision on the market.
The Court’s decision has helped a few sectors, such as hospital stocks, move higher, but has seen shares of the big insurers move lower. A less-than-imposing revision in first-quarter GDP growth issued this morning, in which the rate of opening-period economic gain held at a tepid rate of 1.9%, has also not helped the mood of the bulls. The market is still up on the year, but the 3.4% increase in the Dow Jones Industrial Average that was in place at the start of the day, has now been whittled down to just about 2% with this morning's sharp setback. - Harvey S. Katz
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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Stocks to Watch from The Survey – In a widely anticipated move, media conglomerate News Corp. (NWS) has confirmed that it will proceed with plans to split into two separate companies, one housing the media and entertainment business and the other comprised of publishing and education assets. Rupert Murdoch would be Chairman of both entities and CEO of the media and entertainment company.
Shares of JPMorgan Chase (JPM – Free JPMorgan Stock Report) are trading notably lower in the premarket this morning, after a leading New York daily reported that the bank’s trading losses could reach as high as $9 billion under a worst-case scenario, far higher than the roughly $2 billion previously thought.
In earnings news, the stock of Family Dollar (FDO) is down sharply in pre-market trading, after the discount retailer announced May-period results and a forward-looking outlook that apparently left investors wanting more. After the market closes today, athletic footwear and apparel giant Nike (NKE) and smartphone maker Research In Motion (RIMM) are scheduled to release quarterly financial data. – Matthew E. Spencer
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 - U.S. stocks rallied for a second day in succession yesterday, and in the process, just about wiped out the somewhat sharper loss on Monday, thereby yielding a comparatively neutral three-day performance thus far this week. However, the bulls may need some help to rally the market further, as sharp losses in the European bourses so far this morning, especially in the Frankfurt DAX, are putting our equity futures under some pressure, as we move inside of an hour of the starting point in our trading day. All told, the S&P 500 Index futures are off about six points and the NASDAQ futures are lower by 10 points.
Helping our market yesterday was a pickup in the price of oil. Hopes that this strength is a good omen for our slumbering economic expansion and, by extension for corporate earnings, provided some assist to the bulls. Moreover, there was an upbeat report issued during the morning on pending home sales during May. That report showed strength that exceeded expectations and was, in fact, the best report on that sector so far this year. The pending home sales gain would seem to back up a survey, issued on Monday, in which the Commerce Department reported that new home sales had jumped up to an annualized rate of 369,000 homes in May. Also, data issued on Tuesday showed some strength in home prices. On the other hand, we are seeing some weakness in consumer confidence, sales of older homes, and retailing activity. So, it is clearly a mixed bag, and the stock market's up-and-down recent pattern and ongoing trading range activity would seem to underscore this.
Meanwhile, yesterday's gains, which lifted the Dow Jones Industrial Average and the NASDAQ by 92 and 21 points, respectively, brought the former index up to 12,627, or just modestly above the midpoint of the recent range. For the year to date, this index is still up a modest 3.4%. That is well under the peak for the year, but is back up some from the modest aggregate loss that had been seen last month.
Now, as noted, a new day dawns, and it promises to be a fairly busy one. That is because in addition to the latest European summit, which is getting under way today, but which is not expected to yield much in the way of concrete action to tackle that region's myriad economic ills, we also have now seen the latest revision in first-quarter gross domestic product along our shores. Specifically, that metric, earlier estimated to have gained 1.9% in the opening period, was unchanged in the final reading. That was as expected and should not mean much in the way of movement for the equity averages.
Then, just after 10:00 (EDT) this morning, the U.S. Supreme Court is expected to issue its ruling on the constitutionality of the Affordable Care Act. This ruling, however, will not end the contentious health care debate, which remains a political football, especially in this hotly contested Presidential Election year. We will see if this ruling has much of an impact on trading today and going forward. Finally, there is news on the banking front today, with a report out indicating that the ultimate loss on JPMorgan Chase's (JPM – Free JPMorgan Stock Report) trading mishaps could total some $9 billion. JPM shares are indicated modestly lower in the pre-market so far. – Harvey S. Katz
At the time of this report's writing, the author did not have positions in any of the companies mentioned.