U.S stocks rose late Friday, erasing earlier losses as the Dow Industrials pushed into positive territory minutes before the close to extend its winnings streak to 7-days, while the Nasdaq Composite jumped and the S&P 500 index posted modest gains. All three averages posted gains of over 1% for the week. Optimism remains a key driver to market gains related to upcoming announcements on U.S. President Donald Trump's tax and trade policies. Today however was dominated by M&A, with the food sector highlighted after a rebuffed $143B offer for Unilever by Kraft. However, there were other potential deal announcements throughout, including one in the Telco space according to a Reuters report (S/TMUS) late day. No economic data today after a week of strong reports, and rising inflation, which has boosted interest rate expectations Banks took a breather after surging early in the week after Fed Chief Janet Yellen testified to Congress on monetary policy. Reminder U.S. equity markets are closed on Monday for President’s Day.
Equities are mostly lower (though the Nasdaq Composite holding around break-even, paring earlier losses), as the Dow Industrials and S&P 500 pullback from near record highs. Coming into the day, for the week, the Dow industrials have gained 1.7%, while the Nasdaq Composite and S&P 500 trail with gains of 1.4% and 1.3%. Despite weakness early, it doesn’t appear to be the start of a correction today, as the S&P 500 approaches 90 days now since the last 1% decline for the major average. Story of the day in consumer staples space, as food and household products stocks volatile on reports Kraft announced that it made a $143B merger proposal to Unilever that was declined (more details below). The news has picked up interest in other household product names, while food names decline (also hurt by lower earnings/outlooks from GIS, SJM, and CPB). Commodity prices are mixed, the dollar is mixed and bods gain amid the early decline in stocks.
It was a lackluster trading session today, with major averages ending mixed, failing to build on the string of record setting closing levels this week. There were a lot of recent “crowded trades” unwind a bit today as the dollar pulled back despite better economic data/rising rate expectations, bonds up slightly, and financials lagging but that comes after outperforming the last few days. Defensive/interest rate sensitive sectors leading (Utilities, REITs, and Telecoms). Overall, there really wasn’t much going on today outside of earnings and the better data, with markets getting a break from all the recent Fed speakers. So far this quarter, earnings have been better (but revs still disappointing) and economic data has been overwhelmingly positive of late, with rising inflation, but the political risks continue to rise.
Equities doing a whole lot of nothing early on, trading sideways, which isn’t a so bad for bulls, as all four major stock averages closed at record all-time highs yesterday. Markets having a tough time to decipher whether the recent spate of stronger economic data is a positive for markets (shows economy improving), or a negative as it pushes the pace of interest rate hikes (potentially) from the FOMC. Utilities, Materials, Energy, Tech lead higher while Health Care, Financials, Consumer sectors, and Industrials decline early. After leading markets the last two days - financials/banks take a breather, sliding with lower yields on day - the 10-year yield slips over 3 bps to under 2.47%. Note major averages come into today’s trading riding a 7-day winning streak for the S&P 500 Index and Nasdaq Composite.
New day same story…as stocks opened mixed to lower, but ended the day with new all-time highs for the major averages. The S&P 500 index posted another record high, rising for a 7th straight session, led by financials which trade to their best levels prior to 2008 crisis, with Dow components JPM, GS and AXP all posting 52-week highs. The underlying theme remains “no fear” in the marketplace at all, as the CBOE Volatility index (VIX) holds at lows and investors continue to scoop up stocks at every opportunity. Note the Dow Industrials have moved higher by over 600 points in just 9-days since it last topped the 20K mark, while momentum grinds higher. The NASDAQ also posted its 7th consecutive daily gain.