After The Close - The stock market opened higher this morning, but traded in sideways fashion for the remainder of the session. Sentiment was fairly upbeat earlier in the day, but at times the tone seemed subdued, as some fatigue may be starting to set in. At the end of the session, the Dow Jones Industrial Average was ahead 50 points; the broader S&P 500 Index was up 13 points, and the NASDAQ was higher by 30 points. Market breadth showed a mixed session, with advancing issues about even with decliners on the NYSE. The utilities, financials, and technology stocks pressed ahead, while the industrial names and basic materials issues lagged the pack.
Meanwhile, in economic news, housing starts increased nicely to an annualized rate of 1.6 million units for the month of December. This reading easily surpassed analyst expectations, and suggests that the housing market remains in good shape. In contrast, industrial production slipped 0.3% in December, falling short of the consensus view. Elsewhere, the consumer still seems to be feeling upbeat about the economy. Here, the University of Michigan’s consumer sentiment survey registered a preliminary reading of 99.1 for the month of January, which was a healthy showing.
In corporate news, a number of widely held companies posted profit reports over the past 24 hours. Of note, shares of CSX Corp. (CSX) traded slightly lower today, after the railroad operator reported mixed results. In the energy area, Schlumberger (SLB) delivered a better-than-anticipated report, but the news failed to move the company’s stock much. Finally, in the financial arena, shares of State Street (STT) gained ground, as investors seemed happy with that company’s numbers.
Technically, equities continue to move up, as the month of January progresses. The signing of a trade deal with China has been a positive catalyst. Further, the fourth-quarter earnings season has gotten off to a good start. Some traders on Wall Street may worry that valuations seem elevated, but the market is heading higher for now. – 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 bull market is continuing to roar as we head towards the conclusion of another solid week for investors. An apparent easing in Middle East tensions, stellar earnings, particularly among the banking and assorted financial services groups, supportive economic data, and the recent signing of a phase one trade understanding with China are lifting sentiment on the Street. So, each day has brought further all-time highs for the major indexes, with the Dow Jones Industrial Average, for example, now sitting comfortably above the 29,000 mark. Similar percentage increases have been tabulated by the other composites in recent days.
And yesterday was no exception in early dealings, as euphoria over the trade deal helped lift the Dow to a morning-best gain of about 190 points, lifting that index above 29,200. Meanwhile, in addition to the trade deal, the bullish case was strengthened by the release of generally benign business metrics. On point, the Labor Department posted weekly jobless claims of just 204,000. That was a drop of 10,000 from the previous week. Expectations had been for a rise to 216,000. Also, retail sales edged up 0.3% in December, which was in line with expectations.
As for the latter report, the advance estimate of retail and food services sales rose 0.3% last month, matching expectations. It also was in line with the November gain. Among the stronger sales categories last month were at electronics and appliance stores, food and beverage outlets, and clothing enterprises. However, department store sales disappointed, falling by 0.8%, while sales over the Internet, albeit higher in December, did not gain all that much traction. Overall, this issuance did little for the market. although the report was sound enough to suggest that high consumer confidence is helping business activity somewhat.
Meantime, after the initial burst forward in the morning, the market retained its strength as we entered the afternoon, with the Dow holding an advance of some 170 points at 1:00 PM (EST). The NASDAQ, the S&P Mid-Cap 400 and the S&P 500, along with the Russell 2000 all did well in this bullish rush that seems to be forging ahead without a whiff of serious profit taking. As the session rolled on, the gains, which had stabilized for a time, increased anew, as we entered the final hour, with the Dow's advance topping 200 points, lifting that index well past 29,200.
The buying then persisted into the final hour, with several issues leading the way. On point, we saw Morgan Stanley (MS) stock, a beneficiary of strong quarterly earnings, jump ahead by some 7%. Also doing well were shares of Dow component Cisco Systems (CSCO – Free Cisco Stock Report), which rose some 2%. As noted, stocks roared ahead into the close, with the key averages all ending matters near session highs, with the Dow up 267 points, placing it just under 29,300. The S&P 500, meantime, rose above 3,300 with a 28-point surge, while the NASDAQ leaped ahead by 98 points. There was simply no place for the bears to hide.
Looking ahead to a new day now and following the fireworks yesterday and ahead of a consumer sentiment survey this morning, the picture painted by the equity futures is a bright one at this hour, suggesting that stocks will open the final trading day ahead of the long holiday weekend with solid gains. - Harvey S. Katz, CFA