After The Close - Stocks ended the week modestly higher, and notably in an orderly fashion after a mid-week frenzy caused by China’s currency devaluations. At the close on Friday, the Dow Jones Industrial Average was up 69 points; the NASDAQ was 15 points to the good; and the S&P 500 was in the plus column by eight points. Market breadth was clearly positive, as well, with gaining issues topping decliners by about two to one on the New York Stock Exchange and seven to five on the NASDAQ.
The day’s economic news was of some help to the bulls. Data on industrial production showed strength in auto manufacturing; the latest reading on inflation at the wholesale level was more benign than the prior month; and while consumer sentiment was less than expectations, it wasn’t so bad as to derail investor sentiment.
More important, the type of disruptive news from overseas that sent the market into a tailspin on Tuesday and the first part of Wednesday was lacking. Specifically, there was no unexpected currency devaluation from China that created concern over the world’s second largest economy. In fact, there was optimism regarding a bailout package for Greece, which was, in fact, approved late in the trading day.
The oil market was relatively quiet, too. Crude oil finished up $0.27 a barrel in New York trading, to $42.50. Still, oil was down around 3% for the week on the aforementioned fears about China, as well as an ongoing supply glut.
A bit of upbeat news for the hard-pressed oil business came in the form of word that the Obama Administration will allow limited sales of crude oil to Mexico. The idea, to swap higher-grade shale oil for heavier Mexican crude, is a practical one meant to benefit both sides of the border.
Petroleum producers would like to see the move be another step toward allowing exports, banned since the 1970s, since global oil quotations are generally higher than those domestically.
The good news on oil was not enough to lift sentiment toward the energy sector, though, which lagged among the stock market’s ten major groups. But all of the others sectors rose on the day.
For the week, the Dow posted a better-than-100 point gain, and the NASDAQ and the S&P also advanced slightly. But it was a rough ride for a while, owing to China’s surprise currency devaluations and continued weakness in oil. - Robert Mitkowski
At the time of this writing, the author did not have a position in any of the companies mentioned.
12:00 PM EDT - Equities are putting in a mixed, and somewhat quiet, session today, as traders wrap up another choppy week on Wall Street. As we head into the afternoon in New York, the Dow Jones Industrial Average is up 38 points; the broader S&P 500 Index is up slightly; while the NASDAQ is lower by seven points. Market breadth shows a neutral bias to the session, with advancing issues just slightly ahead of decliners on the NYSE. The major equity sectors also are divided, as strength in the financial and basic materials names is being offset by weakness in the energy and healthcare issues.
Traders received a generally supportive batch of economic news this morning. Specifically, producer prices edged up 0.2% in July, which was a bit more than had been expected. The core reading, which excludes food and energy, also moved a bit higher. However, these figures are still quite benign, and don’t yet suggest that inflationary pressures are becoming a problem. Meanwhile, industrial production increased 0.6% in July, which was better than had been expected. The gain was partially due to strong automobile output during the month. Elsewhere, the University of Michigan’s Consumer Sentiment report registered a preliminary reading of 92.9 for August, which was down slightly from the July figure, and just short of the consensus view. However, it should be noted that the current level is still quite high, especially compared to the past couple of years, and the consumer seems to be in decent shape, as underscored by yesterday’s strong retail sales report.
Meanwhile, on the corporate front, a few notable retailers have issued results. Specifically, shares of J.C. Penney (JCP) are moving higher after the department store operator posted better-than-anticipated figures. Further, Nordstrom (JWN) stock is advancing, in response to a solid release and encouraging guidance.
Technically, the stock market has been directionless for the past couple of months. The challenging global economic conditions have partially overshadowed the improvements made here in the United States. Furthermore, as a result of weak demand in developing countries, many major U.S. energy and commodity companies have been struggling, and losses in these stocks have weighed on the major averages and have put a damper on sentiment. In addition, uncertainty about the direction of interest rates also has been an ongoing concern. Until these issues are partially clarified, it may be hard for the bulls to lead the charge. – 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 - After a succession of wild rides during the past three sessions, with the bulls on Monday, the bears on Tuesday, and both groups on Wednesday getting into the act, the stock market calmed down noticeably yesterday, as equities held in a narrow range, especially by recent standards. For the most part, that range was in the minus column in the morning, before a late burst of buying carried the major large-cap indexes onto the plus side of the ledger as the lunch hour neared on the East Coast.
The market's performance leading into the lunch break was rather encouraging, as it was coming against a backdrop of still falling energy prices. Indeed, a barrel of crude oil in New York had eased to just over $42, off more than a dollar following a slight uptick on Wednesday. Oil's latest descent, on excess supply concerns, put pressure on an energy group that had rebounded somewhat the day before. Other basic materials, notably the steels, aluminums, and energy construction-related stocks, also wilted in the early going, while some consumer names rallied.
The late-morning comeback then extended into the first part of the afternoon, enabling the Dow Jones Industrial Average and the NASDAQ to both rally nicely, with the former quickly moving to a 60-point advance, while the latter climbed better than 20 points on selective strength in technology. All told, the market had a mixed tone to it at that point, with declining stocks leading gaining issues narrowly on the NYSE, but with advancers in the lead on the NASDAQ.
Then, as the afternoon progressed, the market firmed up some more, with the Dow advancing by a more formidable near-80 point gain, and the NASDAQ responding well, too. A more stable currency outlook in China and the report of a solid, albeit in line, rise in July retail spending stateside were comforting developments and likely helped sentiment after the bearish fireworks from Tuesday and early Wednesday.
Ultimately, however, falling oil prices--crude briefly moved below $42 a barrel, to a six-and-a-half year low, before nudging back above $42--may have been too much for the market to accommodate. Thus, the sellers resurfaced as we moved deeply into the final hour, though without the passion of earlier in the week.
Once again, the late weakness was principally led by the two weakest groups in recent weeks, the basic materials stocks and the energy providers. These were easily the biggest losers among the 10 leading equity groups. Also pulling back further were some of the retailers, with Kohl's Corp. (KSS) shares leading the way lower on an earnings miss and subsequent analyst downgrades. That stock lost 9% on the day.
All told, at the close, the Dow managed to salvage just six points of its earlier near 80-point gain, while losses of three and 11 points were sustained, respectively, by the Standard and Poor's 500 Index and the NASDAQ. Losing stocks remained well ahead of gainers on the Big Board, to the tune of about three-to-two. Among the top 10 groups only the consumer cyclical stocks rose, while such non-cyclical issues as Procter & Gamble (PG - Free Procter & Gamble Stock Report) fell, in this latter case to within pennies a share of a 52-week low.
Now, following this quiet session, the market is about ready to start the daily soap opera again. In advance of the U.S. markets opening for business, we see that stocks in Asia were mostly lower overnight, but not materially so, suggesting that the earlier angst regarding the devaluation of China's currency may have been overdone. However, in Europe, stocks are notably lower, as euro-zone GDP figures missed expectations. The Continent also seems worried about whether a third bailout of Greece can be fashioned. A meeting to resolve such financial matters is scheduled for today.
As to our market, the early indicators are mildly bearish, with concerns about oil still in play. As to that commodity, a barrel of crude is holding just about $42 this morning in New York dealings. A just-issued benign report on producer prices, meanwhile has done little to sway sentiment. Later on this morning, we will hear from the Commerce Department, as that government agency will weigh in with July data on industrial production and factory usage. - Harvey S. Katz