Loading...
 

After The Close - The U.S. stock market moved nicely higher this morning, pulled back in mid-session, and then resumed its advance later in the day, before easing back modestly into the close. At the end of trading, the Dow Jones Industrial Average was up 116 points; the broader S&P 500 Index was ahead 10 points; and the NASDAQ was flat. The strength was widespread today, with winners ahead of losers by about two to one on the NYSE. Today, the energy stocks drove the market higher, thanks to stronger crude oil prices. Specifically, the price of world’s most actively traded commodity rose over 4%, to more than $29 a barrel, today. The basic materials names also rallied nicely. But, the healthcare stocks retreated.

Meanwhile, there were a few economic reports released this morning. Of note, initial jobless claims rose to 293,000 for the week ended January 16th, while economists had been looking for a modest decline. Elsewhere, according to the Philadelphia Fed, business conditions in that region improved somewhat more than had been expected during the month of January. Tomorrow, existing home sales for December, and the Conference Board’s Leading Indicators for that month will be issued.

In the corporate arena, a few major companies reported today. Of note, shares of Verizon (VZ Free Verizon Stock Report) moved higher, after the telecom giant provided solid quarterly results and offered a decent outlook. But, Travelers Companies (TRV Free Travelers Stock Report) stock slipped a bit, as investors were not overly impressed with the insurer’s latest report. After the market closed today, Starbucks (SBUX) and American Express (AXP Free AmEx Stock Report) weighed in with their numbers.

Technically, after a large swing yesterday, the market now seems to be possibly securing a bottom. However, even though today’s session was constructive, we will need to see the buying continue over the next several days. Pushing the S&P 500 Index back above the 1,900 level will likely be a major goal for the bulls. The earnings season has not been overly impressive, so far, but it has only just begun and a few good reports from leading issues could improve sentiment. – Adam Rosner

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

-

12:10 PM EST -  The major U.S stock market indexes have been volatile but notably positive so far today, attempting to extend yesterday’s late-afternoon recovery – which came on the heels of one of the sharpest declines in recent years earlier in the day. Dovish comments from ECB President Mario Draghi appeared to inspire confidence, as did a modest bounce in oil prices. Overall, it has been a challenging start to the year, with global demand faltering across many sectors, most notably those tied to commodity markets.

Today’s domestic economic data have been somewhat mixed. The Labor Department reported that U.S. weekly jobless claims increased to a seasonally adjusted 293,000 last week, representing a six-month high. Despite the rise, the figure has remained below the key 300,000 threshold for around eleven months, suggesting the labor market is on relatively solid footing.

Oil prices bounced back nicely today, shrugging off a report by the EIA that showed domestic crude inventories rising by approximately four million barrels last week. The better performance is attributable, in part, to the aforementioned comments by Mario Draghi suggesting the need for further monetary stimulus. Today’s stabilization comes on the heels of the commodity having broached multi-year lows of late, as renewed global demand concerns have exacerbated the increasingly wide supply glut resulting from strong U.S. shale and OPEC production. All told, Brent and WTI both traded around $29 a barrel as we approached the lunch hour.

Stocks traded higher headed into the afternoon session, with the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 up 213 points, 46 points, and 23 points, respectively. The advance/decline ratio was 2.4-to-1 on the NYSE, with advancing stocks comfortably outpacing matching declining issues. Nine of the ten major sectors were in the green, with energy and consumer cyclicals leading the way, while healthcare served as a drag. - Simon E. Shnayder

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

-

Before The Bell - With unrelenting pressure coming from skidding oil prices, the stock market now has fallen to levels not seen since late 2014, in the process, wiping out what narrow and selective gains were secured in 2015. Yesterday, for example, a further plunge in oil put the market under severe strain from the opening bell. In all, the Dow Jones Industrial Average, also under duress from a disappointing profit report from International Business Machines (IBM - Free IBM Stock Report), fell more than 400 points before the noon hour had arrived in New York.

In all, as the morning ended, the Dow was off by 460 points, breaking further below the 15,600 mark. The Standard and Poor's 500 Index, meantime, finished the morning off more than 50 points, reaching a 52-week low. The NASDAQ was off by 135 points, on weakness in the tech issues. That index saw its slide bring it down to just over 4,300. Breaking the results down, losing stocks were ahead of winning issues by almost 10 to 1 on the NYSE at that time, with all 10 of the leading equity groups in reverse.

At that point, there appeared little for the bulls to look forward to with more than 1,300 stocks hitting new lows on the Big Board. It was a total rout. And the selling mushroomed into the early part of the afternoon, with the Dow tumbling to a loss of more than 560 points, bringing it below 15,500. The S&P 500 Index also tumbled, falling to 1,812. That was a fresh 52-week low, as the evolving correction became even deeper. Also, the NASDAQ, the weak link so far in 2016, fell more than 160 points at its nadir.

Then, when it looked as though a complete meltdown would occur, the bulls made a stand. The NASDAQ was at the forefront of this mid-afternoon buying, erasing most of its losses in minutes, as the heretofore slumping biotech sector pushed higher. However, even with this reversal, all 10 of the leading groups still were lower, with the weakest links continuing to be the energy stocks, the financials, and the interest-rate sensitive utilities and telecom stocks.

Meanwhile, although oil was again the prime contributor to the latest sharp drop, there were earnings reports issued that did not sit well with investors, in particular the metrics issued by IBM. That disappointing report led to another sharp drop in that blue chip. Also, the economy was in focus, with a pair of unprepossessing reports issued, specifically figures on consumer prices showing a small drop in inflation and data on housing starts and building permits, both of which saw some easing in December.

But even with these diversions, the real story continued to be lower oil and the global ramifications of its drop. Fears of a reversal in China's growth story or the negative impact on our shores from depressed commodity prices, notably oil, continue to frighten investors. And as the market still is not cheap, there is a tendency to run for cover when it seems as if a possible bear market might loom. But with the fundamentals still reasonably good on shore, selling now might not be a prudent strategy.

In any event, the aforementioned comeback gathered momentum as we moved into the final hour of trading, with the Dow briefly paring its deficit to under 120 points. But it was the NASDAQ that made the headlines. In fact, whether it was bargain hunting, short covering, or a case that stocks had fallen too far, too fast, its recovery was eye-catching, with the prior 160-point drop in that composite being erased, as that index buoyed by the biotech issues, such as Amgen (AMGN), moving into the black late in the day.

However, this comeback could not fully hold, as there was a partial retracement of that comeback by the close, as the Dow wound up lower by 249 points, while losses of 22 points and five points were tallied, respectively, by the S&P 500 Index and the NASDAQ. But it had been much worse. The market clearly is oversold, and this partial turnaround could extend into the coming days, in particular, if the selloff in oil abates somewhat.

Meanwhile, looking ahead to the new session, we see that stocks plunged again in Asia overnight, following the earlier lead in our country. However, the bourses are up somewhat in Europe so far this morning, helped by the fact that the European Central Bank voted to keep interest rates unchanged. The move by the ECB and dovish comments by the ECB President is helping our futures to gain strongly, likely setting up a notably higher opening in less than an hour from now. - Harvey S. Katz

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