Before The Bell - The stock market, fresh off of an opening week win for the bulls on Monday, moved out to an early advance in the trading session yesterday morning. That initial firming followed an up-and-down session in the pre-market hours Monday evening. On point, in an interview on a cable news channel at that time, the Administration's key trade advisor indicated that the well-celebrated Phase I trade deal with China had come undone. That was quickly countered by the President who said the agreement was still intact.
That reversal turned the equity futures around, erasing a 400-point loss in The Dow Jones Industrial Average futures into a gain of almost that magnitude. The latter uptick, meanwhile, would persist into the open, when the blue chips quickly went out to a solid gain. The Dow, and especially the NASDAQ, would stay in the green for the duration of the session, with the day's best showing taking place in the early afternoon, with the Dow gaining almost 300 points at that time. Meanwhile, the tech-heavy NASDAQ notched an all-time high.
In all, the Dow added 131 points yesterday, with an erosion of about 50% of its best gain in the last hour of trading. Strong upticks in big tech, constructively eased the impetus to take profits. It would be the tech-heavy NASDAQ's eighth straight win, in all. In this sector, blue-chip and NASDAQ component Apple Inc. (AAPL) rose more than 2%, climbing at one point past $372 a share, after seeing one brokerage house up the price target on this stock to $400. Microsoft (MSFT) also hit an all-time high during the session.
As to the stock market, overall, it continued to gain on some optimism surrounding the economy, as the bulls are looking at much of the recent data and projecting a better start to the third quarter and perhaps down the home stretch this year. On that point, the government reported yesterday that sales of new homes had surged by 16.6% in May to a seasonally adjusted annual rate of 676,000 residences. We will also be getting key data on personal income, consumer spending, and consumer sentiment tomorrow morning.
Meanwhile, holding back even better gains are continuing fears about a new surge in COVID-19 infections, with nearly half the states in the country now reporting increases in infections, some even reaching record levels of the disease daily. In fact, several states are warning of renewed closures of businesses and more lockdowns should this daily upturn not moderate in the coming weeks. So, even as the economy is seemingly on the rebound, there are worrisome issues still to be dealt with.
Finally, as we look out to a new day and after some choppy trading in the equity futures last evening, the market seems set to open the week's penultimate session to the downside in some possible early profit taking. – Harvey S. Katz, CFA