Before the Bell: We now approach the middle trading day of this event-filled week on Wall Street. Highlighting the comings and goings in the equity market will be a series of earnings reports, some of which will feature big names in the technology space. Also of note, the Federal Reserve will conclude its two-day FOMC meeting this afternoon. No changes in borrowing costs are likely to be even hinted at, while the accompanying monetary statement will almost assuredly suggest further accommodative policies will follow.
Looking ahead, the Labor Department is scheduled to issue data on wholesale prices this Friday, when it releases the Producer Price Index. And yesterday, the major news story came from the Conference Board, as its survey on consumer confidence showed a big monthly advance in April, as a strong economy, rising stock market, and the rapid distribution of COVID-19 vaccines made for a feel good story. That upbeat economic news, however, could not enliven the bulls and the equity market closed mixed. Expectations are that stocks will open slightly lower.
Regarding the day ahead, it will be full of critical earnings reports, as was yesterday's trading session, with such notable enterprises as 3M (MMM) posting higher-than-expected earnings and revenues. However, that stock eased after the company warned of higher costs due to supply chain disruption. Mixed performances also were reported by Tesla (TSLA) and General Electric (GE), with both of those stocks easing back somewhat in trading in the most recent session. And this morning, shares of Boeing (BA) are lower after the company posted a quarterly loss.
Breaking down the stock market, which would see just three of the 11 major equity groups, energy, financials, and industrials gain ground, yesterday, it would be a mixed session overall, with just communications services, health care, and the utilities giving any ground of note. As for the averages, they, too, were mixed, with the Dow Jones Industrials and the S&P 500 Index each just about at the neutral line, while the NASDAQ lost about a third of a percentage point.
As for the market, it remains pricey, with a P/E above 22 and a dividend yield below 2.0%. Treasury note yields, which can be competition for stocks in terms of their dividends, edged up yesterday and now sit at 1.62%. Such fixed instrument vehicles are still not crimping the market, but they will need to be watched. – Harvey S. Katz, CFA