After The Close - Stocks got off to a slightly higher start this morning, advanced sharply at midday, and extended these gains through most of the afternoon, before easing into the close. Of note, sentiment turned positive after comments from President Trump lessened traders’ concerns about a wider conflict in the Middle East. By the end of the session, the Dow Jones Industrial Average was ahead 161 points; the broader S&P 500 Index was up 16 points, and the NASDAQ was higher by 61 points.
Market breadth was favorable, with advancers leading decliners by a margin of about 2 to 1 on the NYSE. From a sector perspective, the technology, consumer, and healthcare stocks led the way higher, while the energy and basic materials issues lagged. Of note, the energy-related issues retreated today, as traders were likely less worried about rising energy prices and supply disruptions.
In economic news, the employment situation is returning to the spotlight. Today, the Automatic Data Processing (ADP) report showed 202,000 private sector jobs were added to the economy in the month of December. This reading easily surpassed analyst expectations. Tomorrow, we will get a look at the latest weekly jobless claims, and on Friday, the government releases the December employment report. This last issuance tends to be widely followed by Wall Street and can move the markets.
In corporate news, a handful of companies posted their reports today. Specifically, shares of Walgreens Boots Alliance (WBA – Free Walgreens Stock Report) moved lower, after the pharmacy operator provided weaker-than-anticipated results. Shares of Constellation Brands (STZ) rose nicely, in response to a good report. Also, Lennar (LEN) stock gained ground after the homebuilder delivered a solid set of numbers.
Technically, stocks seem to be holding their ground, as 2020 gets started. However, it is a bit too early to tell how the year will unfold. - 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 - As had been the case Monday morning, the stock market opened the session yesterday to the downside, weighed down by global concerns, most notably the heightened tensions between the United States and Iran. And, just as on Monday when a rapid 200-point descent in the Dow Jones Industrial Average was quickly and steadily followed by some buying, the same thing took place yesterday. However, unlike the earlier session when the buying persisted into the close with nary a break, there was choppier trading in the latest session.
On point, after falling by 137 points in the first few minutes, the Dow did come back. But that composite would fall back again to a loss of just over 1200 points as the afternoon began. As before, worries about Iran and its possible response to the killing of its military chief last week worried the Street. The main casualties yesterday morning and early afternoon would be the health care and energy stocks, in particular such Dow components as Merck (MRK –Free Merck Stock Report) and Chevron (CVX – Free Chevron Stock Report).
On the other hand, the latest session saw selective gains in the technology group, notably in the shares of memory chip maker Micron (MU), which jumped in price on the heels of a brokerage house upgrade. Meanwhile, in other news, the Institute for Supply Management, which earlier this month had issued rather unprepossessing news on the manufacturing sector, came out yesterday with better data on non-manufacturing activity. On point, its survey on the services sector showed that activity had picked up in December.
Specifically, the survey came in at 55.0. That was up from November's 53.9 reading. That result also was better than had been forecast and was well above the 50.0 divide between an expanding and a contracting services category. Among the areas reporting increases last month were business activity, which was up sharply, as were supplier deliveries and inventories. Backtracking, however, were employment and backlogs. Still, the result was reassuring, especially following the dour issuance on manufacturing.
Meanwhile, the market, unlike Monday, would not strengthen in the afternoon. Rather, it drifted lower, so that as the session wound down, we were back near the day's lows, with the Dow off by 120 points at the close. Also lower was the S&P 500 Index and with some late selling, the NASDAQ. The inability to keep the rally going was likely attributable to continuing worries about a possible U.S.-Iran conflict and the impact such a flare-up could have on an already unstable region.
And those concerns appear to be on target, as after the market closed yesterday, an attack on a U.S. airbase in Iraq by missiles sent the equity futures plummeting by more than 400 points. However, looking ahead to the coming session, we see that the U.S. equity futures have now erased their earlier losses, and are now poised to open the new day with gains as confidence returns. – Harvey S. Katz, CFA