After The Close - Stocks opened higher this morning and managed to build on these gains through the afternoon. At the close of trading, the Dow Jones Industrial Average was ahead roughly 184 points; the broader S&P 500 Index was up 20 points; and the NASDAQ was higher by 52 points. Market breadth showed broadbased support for stocks, with winners nicely ahead of losers on the NYSE. All of the major equity sectors moved ahead, with impressive gains in the financial and industrial names.
Meanwhile, it was a quiet day for economic news, with just a couple of items released. Specifically, the Empire Manufacturing Survey, which tracks conditions in the greater New York region, came in at 5.2 for the month of April. Analysts had been looking for a somewhat stronger showing. Further, the NAHB Housing Market Index registered a reading of 68 for the month of April, down slightly from the March number. Tomorrow, we will get a look at the latest monthly housing starts and building permits. Industrial production for the month of March will also be released.
The first-quarter corporate reporting season is now underway. While few widely watched names posted their results early this morning, Netflix (NFLX) will weigh in after the market closes. Tomorrow, we will hear from Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report) and International Business Machines (IBM - Free IBM Stock Report).
Technically, the stock market has yet to meaningfully reverse course after pulling back in early March. However, the first-quarter earnings season may help spur on the bulls, assuming corporations can deliver impressive numbers and upbeat guidance. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
12:15 PM EDT - The equity futures presaged a higher opening for the U.S. equity market and investors followed through, pushing the major indexes higher this morning. The market appears to be enjoying a bit of a relief rally, in the wake of North Korea’s failed missile launch, and news that economic growth in China has picked up.
For the time being, at least, the market’s attention has shifted back toward first-quarter earnings season. In that regard, equity valuations are a bit stretched, and last Thursday’s broad-based selloff was an indication of some general skittishness. Thus, investors will need some evidence that Corporate America can continue to deliver. Among the dozens of companies reporting this week will be a big slice of Dow Industrial components, including Bank of America Corp. (BAC), Goldman Sachs Group (GS - Free Goldman Sachs Stock Report), International Business Machines (IBM - Free IBM Stock Report), Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report), UnitedHealth Group (UNH - Free UnitedHealth Stock Report), American Express (AXP - Free American Express Stock Report), Morgan Stanley (MS), Travelers (TRV - Free Travelers Stock Report), Verizon (VZ - Free Verizon Stock Report), Visa (V - Free Visa Stock Report), and General Electric (GE - Free GE Stock Report).
Investors also have a full plate of economic news to digest this week. On Tuesday we will get the latest data on industrial production, housing starts, and crude oil inventories. Then, Wednesday brings the latest Beige Book summation of economic conditions. The wording of that report will likely be pored over carefully for any indications of the central bank’s next course of action, particularly in light of March’s drop in consumer prices. This will be followed by the weekly jobless claims report on Thursday and the latest reading on existing home sales on Friday.
At the Noon hour of trading in New York, the bulls remained in charge with the Dow Jones Industrials, the S&P 500, and the tech-heavy NASDAQ all showing gains of about half a percentage point. Each of the 10 major equity groups were firmly in the green, led by industrial and financial issues, each up about three-quarters of a percentage point.
Elsewhere, crude oil futures are down modestly following indications that output from the U.S. (the world’s third-largest producer) is set to continue to rise. Namely, U.S. drill rig counts have now risen for 13 consecutive weeks to their highest levels in about two years.
Meanwhile, trading is quiet across the Atlantic, as most major European markets (notably London, Germany, and France) won’t reopen until tomorrow due to the Easter holiday. - Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before The Bell - Equity investors returning from the long holiday weekend will be greeted by a heavy dose of news from Corporate America, as first-quarter earnings season begins to heat up. Wall Street got a glimpse of things to come last week, with the release of quarterly results from some prominent U.S. banks, including JPMorgan Chase (JPM - Free JPMorgan Chase Stock Report). In general, investors seemed to be a bit skittish ahead of what will be a few very important few weeks for stocks. With equity market valuations still looking quite stretched, stocks will need some favorable earnings news to get the bulls fully engaged again. If earnings news were to disappoint—something that we think will not materialize—it would probably pressure stocks, especially with the growing geopolitical concerns and what is looking like a less accommodative monetary policy from the Federal Reserve in the coming months.
On Thursday, investors faced a wall of worry ahead of the earnings season and the aforementioned geopolitical concerns, which included building tensions between the United States and Russia, Syria, and North Korea. This resulted in a broadbased selloff, with the Dow Jones Industrials, the NASDAQ, and broader S&P 500 Index falling 139, 31, and 16 points, respectively. The setbacks were even more severe for the small- and mid-cap sectors, with the Russell 2000 and the S&P Mid-Cap 400 Index down more than 1% on the day. In general, there were few places for those long equities to hide, as each of the 10 major equity groups were in negative territory and there was a plurality of declining issues on both the Big Board and the NASDAQ.
From a sector perspective, the biggest laggards on Thursday were the economically sensitive groups. The selling was most prominent in the commodities area, with large setbacks seen in the energy and basic materials categories. The financial stocks were also out of favor, with the banking sector not getting much help from the quarterly reports of JPMorgan Chase and Wells Fargo (WFC).
Turning to the week at hand, the big story for Wall Street will probably be corporate earnings. On that front, we will get reports from a number of industry heavyweights, including nine Dow-30 components. As noted above, we sense that Wall Street will need to get some positive news from Corporate America to convince the bulls back into the market.
In this busy earnings week, we will receive some notable news on the U.S. economy, including data on industrial production, housing starts, and existing home sales. We will also get the latest Beige Book summation of economic conditions on Wednesday afternoon. This report is likely to be highly scrutinized by investors for more clues about what the central bank might do with regard to monetary policy in the coming months. Investors should also note that last Friday, the Department of Commerce reported mixed retail sales data for the month of March. Specifically, the advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $470.8 billion, a decrease of 0.2% from the previous month, but 5.2% above March 2016. Total sales for the January 2017 through March 2017 period were up 5.4% from the same period a year ago. With trading set to resume for the first time since the retail sales figures were released, we would not be overly surprised if the consumer discretionary sector is on the minds of investors this morning.
With less than an hour to go before the commencement of trading stateside, the equity futures are presaging a higher opening for the U.S. equity market, with some bargain hunting after Thursday’s selloff. Overnight, the main indexes in Asia finished mixed after investors learned that China's economy expanded at a faster-than-expected pace (6.9% GDP growth) in the first quarter, with higher government infrastructure spending and a continued property boom helping boost industrial output by the most in over two years. Meantime, the major European bourses are in the red as trading moves into the second half of the session on the Continent. Elsewhere, crude oil is lower this morning on signs that the United States is continuing to add output, largely offsetting news of the strong economic growth in China and OPEC efforts to cut production. - William G. Ferguson