Before The Bell - Wall Street trading got under way yesterday with a bevy of economic reports being issued in rapid succession. First, the Labor Department said that first-time jobless claims had come in better than forecast falling below 800,000 for the first time since March, or when COVID-19 was first making its deadly appearance.
That report, issued before the stock market opened, did little to move the needle, despite its welcome trend, and equities began trading only narrowly higher. Then, two other issuances came across the screens of both economists and market investors and traders.
On point, data released a half hour into the session showed that sales of existing homes had risen for the fourth month in succession in September, gaining 9.4% from August to an annual rate of 6.54 million homes. Importantly, the number likely would have been higher had supplies been ample.
At the same time, the Conference Board reported that its Leading Economic Index increased by 0.7% during September, keeping alive a nice month-to-month uptrend. However, the latest increase paled against the 2.0% rise in July and the 1.4% gain in August. Clearly, this index is decelerating.
None of this seemed to matter to a market that is now focused on the stimulus talks in Congress. So, stocks drifted lower early in the morning, with the Dow Jones Industrial Average falling by about 170 points in the first hour. Those losses were undone, however, after Speaker Nancy Pelosi said a stimulus deal was just about there. Getting Senate approval could be difficult, though, given the Majority Leader's caution.
Then, there is earnings, with household products maker Kimberly-Clark (KMB) seeing its stock fall after missing on the bottom line. It was another story for AT&T (T), which gained on decent results. Finally, Dow Chemical (DOW) performed better than expected, but the shares hardly moved. Investors were waiting on Washington.
Meantime, after this comeback in the market, stocks drifted a little lower into the lunch hour. But once more, the trading range was tight. The afternoon brought in some fresh buying, with the Dow cresting at about 2PM and then at 3:30 PM (EDT). The S&P 500 followed a similar path as did the NASDAQ, though this latter composite was in a much more modest band.
At the close, the Dow would be ahead by 153 points; the S&P would be up 18 points; and the NASDAQ would add 21 points. Leading the way were the big banks on rising bond yields. Overall, it was the seeming progress on the stimulus talks that whetted the bullish appetite for stocks.
As for the final day of the week, the economic news will be light so the focus should be entirely on the stimulus talks, as well as last night's Presidential debate. Regarding the outlook in the day ahead, the early read on the equity futures is a positive one. So, look for a modestly higher opening this morning. – Harvey S. Katz, CFA