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After The Close - U.S. stocks mostly continued on the same directionless path forged during morning trading, as investors await Friday’s inauguration ceremony and parse through newly released data. Advancing and declining shares were roughly equal throughout the day, while half of the major market sectors reported gains at the end of the session. The indexes were mixed, and largely range-bound, further suggesting a holding pattern by investors before Donald. J. Trump takes office. The S&P 500 oscillated between positive and negative territory, but rarely strayed outside of a two- to- five-point range for most of the afternoon. Likewise, the tech-laden NASDAQ settled in its own 10-point window after its early-morning buying spree tapered off.

But, the Dow Jones Industrial Average remained mired in the red from bell to bell today. Though it showed signs of life during the mid-morning and late-afternoon hours, the 30-stock grouping failed to break the even line, and bounced around 19,800 for most of the afternoon. This reluctance on the Dow, we think, underscores a broader wave of uncertainty in the market, which is largely related to the lack of clarity from President-elect Trump on his plans for the economy. He declined to endorse the House of Representative’s submission for a revamped corporate tax code – a central tenet of his candidacy’s fiscal platform – on the grounds of it not being straightforward enough. This issue, coupled with a delay in deregulation commentary and destabilizing remarks on international trade, have combined to put an ostensible end to the post-election rally that had sent equities soaring since early November.

Several economic and earnings updates moved the needle, albeit modestly, at several points today. Dow 30 components UnitedHealth Group (UNH - Free UnitedHealth Group Stock Report) and financial services behemoth Goldman Sachs (GS - Free Goldman Sachs Stock Report) held the averages in that index lower, with the former losing as much as 1% of its market value despite reporting solid quarterly performance. Profit takers were likely closing their positions there, as the stock and its sector have benefitted greatly from the prospects of a Trump Presidency. And, at 2:00 P.M. (EST), the Federal Reserve released its Beige Book summation for the month of December, which revealed positive manufacturing activity in nearly all of the central bank’s districts. This likely bolstered the case for gradual rate increases as the year progresses, according to Fed Chair Janet Yellen, who indicated that the economy is approaching the bank’s goals and could likely subsist with a reduced level of monetary support.

Then, in the final hour of trading, the bulls drove valuations in several pockets of the market higher, propelling the NASDAQ average higher and setting a new daily peak for the S&P 500 Index. But, barring further transparency on the President-elect’s fiscal stimulus plans, it is unlikely a strong enough rally occurs to drive the market past Dow 20,000 at this juncture. - Robert Harrington

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


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11:45 AM EST - After a soft start to the trading week yesterday—the market was closed on Monday in observance of the Martin Luther King holiday—on worries about the Britain’s exit from the European Union, the major equity indexes started in directionless fashion today, and not much has changed over the first half of the session. Some mixed news out of the corporate world and on the business beat is likely behind the uninspiring showing. Among the major indexes, the tech-heavy NASDAQ is faring the best, while the Dow Jones Industrial Average is modestly lower. The broader S&P 500 Index has bounced in and out of positive territory, never straying too far away from the neutral line. The mid- and small-cap sectors also are trading in similar manner this morning.

On the corporate front, the data this morning were mixed. On the plus side was a strong quarterly report from banking and financial services giant Goldman Sachs (GS - Free Goldman Sachs Stock Report). The Goldman earnings beat comes on the heels of a similar strong showing from fellow Dow-30 component JPMorgan Chase (JPM - Free JPMorgan Chase Stock Report) last Friday. Shares of Goldman Sachs, which surged after the November Presidential election are off just nominally this morning. Conversely, shares of retailers BIG 5 Sporting Goods (BGFV) and Target (TGT) are being punished after both companies provided disappointing outlooks earlier today; it also is weighing on the overall performance of the consumer discretionary sector.

Meantime, the news from the economic beat was a bit more encouraging. Specifically, The Federal Reserve, which will be issuing its latest Beige Book summation of economic conditions at 2:00 P.M. (EST) this afternoon, reported that industrial production rose by 0.8% in December after a similar percentage retreat in the prior month. The industrial production index was helped by notable advances in the final products and materials subsectors. The industrial production data, though, was offset some by a drop in oil prices this morning in both New York dealings and on the Continent. Investors should note that U.S. Energy Information Administration weekly report, which usually is released on Wednesday, was delayed a day due to the holiday on Monday. Not surprisingly, the oil sector is the biggest laggard among the 10 major equity groups. On the other hand, given the aforementioned industrial data, the industrial and basic materials stocks are trading modestly higher this morning.

Looking ahead to the second half of the session, we would not be surprised if the major equity indexes continue on the current directionless path, as much of the data that came out this morning was mixed. That said, investors should note that Federal Reserve Chair Janet Yellen is scheduled to speak at 3:00 P.M. (EST), which always has the possibility to have an impact on trading. As we near the midday hour on the East Coast, market breadth is roughly neutral, with winning issues leading losers by a slight margin on both the Big Board and the NASDAQ. 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.

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Before The Bell - Wall Street returned to the trading arena yesterday following the long holiday weekend and started the new week off on a soft note as concerns about Great Britain's pending exit from the European Union, uncertainties ahead of the inauguration of Donald J. Trump as our next President, and weak stock markets overseas combined to send equities down early in the day. On point, as the trading day commenced, the sellers dragged the Dow Jones Industrial Average to a loss of some 80 points in the first few minutes of the session. The losses in the NASDAQ were even more pronounced, with that composite heading lower to the tune of about 40 points early in the day.   

But then stocks steadied, and the worst losses were soon pared. Still, weakness was seen in the financials, with key Dow stalwarts, UnitedHealth Group (UNH - Free UnitedHealth Group Stock Report), JPMorgan Chase (JPM - Free JPMorgan Chase Stock Report), and Goldman Sachs (GS - Free Goldman Sachs Stock Report) contributing notably to that index's losses. Sentiment, it would seem, is deteriorating, as the stock market continues its efforts to move past Dow 20,000 with little success. The main issue this week, save for the evolving flood of fourth-quarter earnings, is the pending change in leadership in Washington and the uncertainties engendered by that adjustment.

Of course, the market had soared in the wake of Mr. Trump's election, and we may just be going into a corrective phase borne of higher valuations. Indeed, equities are looking ever more frothy at this point. Further, there is nervousness as the President-elect readies himself to take office. Adding to the concerns, and a prime driver of the markets heading lower yesterday, were mounting worries about Brexit. In a speech yesterday morning, Britain's Prime Minister Theresa May suggested that her nation would seek a clean break from the European Union. 

All of this early action took place on a day in which U.S. economic data were limited. That paucity of news can pressure stocks at times. So, the market meandered about in negative territory into the lunch hour. As the morning concluded, however, the market was off its lows, but stocks were weakening once again. Breaking things down at that point, gaining and losing stocks were about even on the NYSE, but the latter were doubling up the losers on the NASDAQ. All told, about half the equity groups were ahead on the day, led by the utilities. The financial and health care stocks were key laggards.   

As the afternoon moved along, the stock market continued to drift in a narrow, but lower, range until the final 90 minutes, or so, of the trading day, with losses in the major indexes persisting. The stock market, meantime, continues to look fatigued, with the earlier post-election ebullience fading further, as we move through January. It is not that the bears are making a stand, it is just that the bulls cannot seem to get a second wind. So, stocks are faltering. As to results later on yesterday, the market did weaken a bit more as the afternoon wound down.

In sum, as we moved into the final hour, equities eased to session lows until the final few minutes, with the Dow's loss at one point rising to just over 100 points, while the NASDAQ's deficit swelled to some 45 points. In addition, more groups had begun to falter, with losing stocks, which had been in a standoff with gaining stocks on the NYSE at mid-session, moving to a modest lead late in the day, while on the NASDAQ, the advantage for declining stocks widened further. It would wind up being a disappointing day with the bears holding the reins. In the end, the Dow fell nearly 60 points, while the NASDAQ ended off just under 40 points.    

In all, the day's weakest showing was in the small and mid-cap areas. Going forward, we will now be getting a look at industrial production and factory usage. Expectations are that both of these series, which will be reported on at 9:15 AM (EST), will firm up somewhat. As to the day ahead, stocks in Asia were generally higher overnight on a weaker dollar, while on the Continent so far this morning, the key bourses are mixed. As to our futures, the early movement is slightly positive. Meantime, oil is down; gold is flat; and interest rates are pointing a tad higher.   - Harvey S. Katz 

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