After The Close - The stock market traded lower this morning, rebounded briefly in the mid-afternoon after the conclusion of the FOMC meeting, but retreated again later in the day. Much of the market volatility today was due to investor concerns about the economy, and the Federal Reserve’s monetary policy, in particular. At the end of the session, the Dow Jones Industrial Average was down 142 points; the S&P 500 Index was off eight points; while the NASDAQ managed to remain in positive territory, closing nominally higher. Market breadth showed a dividend session, with advancers roughly even with decliners on the NYSE. From a sector perspective, the financial issues declined sharply, while the energy and basic materials names managed to hold up better.
There were few major economic items reported this morning. The bright news, though, was that the FOMC wrapped up its two-day meeting at 2:00 PM (EDT). The central bank opted to leave interest rates unchanged at 2.375%, as had been widely expected. Meanwhile, it also noted that it would not be hiking rates for the remainder of 2019, which was a departure from the prior policy that allowed room for some additional tightening. The change in outlook suggests that the Fed may now feel that the economy could be moderating notably. That news may have come as a surprise to some of the dedicated bulls on Wall Street.
In the corporate arena, we recently received a financial report from a bellwether transportation company. Specifically, shares of FedEx (FDX) moved lower today, after the package shipping giant noted that a sluggish global economy could put a damper on business.
Technically, the market has made considerable progress this year. However, the last few days have been a bit muted. Looking ahead, investors will likely want to see that the United States and China are moving towards a trade deal. However, the situation seems a bit cloudy. - 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 - The Federal Reserve's latest FOMC meeting got under way yesterday; the stock market opened the session nicely higher; and would then sustain rather healthy gains though the morning hours. Almost universal anticipation that the central bank would hold interest rates unchanged when it concluded its two-day get together later this afternoon helped the market get off to a strong start. The Fed also was expected to strike a dovish tone in the corresponding monetary statement. All told, the Dow Jones Industrial Average quickly went out to a gain comfortably north of 100 points and sustained that formidable advance in the early going.
Meanwhile, although there seemed to be virtually no chance that the Fed would lift interest rates, traders will be looking carefully to see just what the accompanying monetary statement will include after it is released at 2:00 PM (EDT) this afternoon. It is expected that the Fed will guide investors to the belief that it will not raise rates very much, if at all, this year, given the slowing pace of GDP growth likely to be seen in 2019. In addition, there are other problems, including the unresolved trade situation with China and the thorny Brexit issue on the Continent and in Great Britain, itself.
As to the stock market, prices rose through the morning, with the Dow holding a gain of 100-150 points for much of this span. A bit more modest gains were tabulated in the other large-cap indexes, while the small-cap Russell 2000 floundered a bit in negative territory. Treasury note yields, in a long descent thus far this year, edged a bit higher in early dealings. Regarding individual names, the recently beleaguered Boeing (BA – Free Boeing Stock Report) stocks rebounded somewhat after days of declines following the tragic crash last week of one of its 737 Max airplanes.
Then, after being range-bound as we noted above, the market took off again as we rolled into the afternoon, with the Dow rising to a gain of more than 190 points shortly after the noon hour struck. The NASDAQ, too, quickened its pace as optimism grew that the Fed would continue its dovish ways this afternoon. With little else in the news, either on our shores or overseas, and with earnings season wrapped up to a great extent, there was little of note other than the Fed for investors to focus on. So stocks rallied. Of course, there is always the possibility for disappointment this afternoon, but that all seemed unlikely as yesterday afternoon began.
However, that buying burst proved to be short-lived, as there suddenly were new concerns arising about conflicting reports over the progress of the U.S.-China trade talks. As a result, what had been a near 200-point mid-session advance in the Dow was nearly wiped out as we moved inside the final two hours of trading. It seems, at least according to some reports, that China might be pushing back against U.S. demands. That could, of course, spell trouble for a market that has seen its early 2019 advance built upon strong trade hopes. We shall see.
Then, after surrendering most of its gains in mid-afternoon, the market sold off further in the final half hour, dragging the Dow briefly down to a loss of about a hundred points before some buying at the bell pared the closing deficit to 27 points. A fractional loss was sustained by the S&P 500, but a nine-point gain was secured by the NASDAQ with that late buying burst. The smaller indexes lost some ground in the end, while most equity groups finished lower. It was a modest retreat, overall, for an overbought stocky market.
Now, as investors await the conclusion of the FOMC meeting, we see that the key markets in Asia were generally lower in the overnight hours on trade concerns. In Europe, meantime, the principal bourses are trending downward, as well at this hour. In other markets, oil prices are lower on global growth worries and Treasury note yields, up grudgingly in the session yesterday are down a little this morning. Finally, the U.S. equity futures are suggesting a higher opening this morning when trading resumes. – Harvey S. Katz, CFA