After Wednesday’s late tax cut plan selloff, the market stabilized yesterday in very narrow ranges with nominal gains and losses in the DOW and the S&P. The NASDAQ once again took the lead in anticipation of five major earnings reports last night: AMZN, GOOG, INTC, MSFT and BIDU. There was obviously some optimism regarding these companies because they were doing well ahead of those reports with particularly heavy buying of calls in AMZN, INTC and MSFT.
Yesterday, the DOW finally ended with a small closing advance of 6 up to 20,981 while the S&P gained 1 to close at 2389. The best performer was the NASDAQ at its 25th record high this year with a gain of 24 to 6049. It was led by gains in AMZN ahead of its report last night, PCLN at a new record high after running out all the short sellers as it was finally able to close above 1800. d FB hit a new high as well. The DOW was helped by HD at a new all-time high, as were 3M and UNH. The DOW was restrained to some extent by declines in CAT, the financial components, and VZ.
The administration is obviously trying to get some legislation through as the 100-day mark approaches on Saturday. The tax plan, rolled out on a single piece of paper, is coming under heavy fire for its potential to widen the budget deficit by 3 to 5 trillion dollars. It also skews the benefits toward the wealthier members of society. In addition, there has been talk of a revised health care plan. Finally, there is the debt ceiling that must be raised by today or there could be a government shutdown. It looks like there will be a one-week exception, so it is not an issue at the present time.
With 300 S&P companies having reported, the gains thus far in the first-quarter have been 13.3%…77% of the companies have beaten the estimates. In addition, 57% have topped revenue projections. The final estimate is for profit gains of 11.8%.
Today, the DOW closed off 40 points, the S&P 500 dropped 4, and the NASDAQ shed 1 point.
Donald M. Selkin
These are excerpts from Don Selkin’s Daily Market Notes, abbreviated and updated with permission from the author. Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analyses concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, Recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: Bloomberg Financial, Reuters, and the Associated Press.