There was a headline today from one of the financial service websites that read: “Stock market pulled lower by banks”. This is a very naïve statement because the NASDAQ is in the process of making its eighth straight advance. The leaders of this latest NASDAQ charge are at further new all-time highs like the astounding gain in NFLX after its report. Currently, Netflix is ahead by 22 points or up 13%. AMZN, FB and PCLN…the other members of the FANG gang…are also doing very today.
That headline should have referred to the DOW, which declined today by as much as 158 points at 10:30 AM today on weaknesses in the bank sector. MCD and the energy stocks headed lower this morning, too. However, the early losses have been cut in thirds, as the DOW is presently down 57 points and the S&P 500 is flat with less than an hour to the closing bell. On the other hand, the NASDAQ is now ahead by 24 to 6338.
Bond yields are lower again with the 10-year down to 2.26% on those weak reports. The dollar is declining to an 11-month low with the Euro at 1.115. Gold is reacting favorably again with a gain up to $1,243. Crude oil is now showing a slight gain at $46.61 a barrel.
The negative part of the market is reacting to last night’s collapse of the Republican health care plan. This can become problematic as it gives the perception of a political party unable to accomplish any legislation despite controlling the White House and both branches of the legislature. This will likely create difficulty for tax cuts and infrastructure spending which have been pushed way into the background for the time being.
Economic reports this week: Tuesday – June import prices, June NAHB Housing Market Sentiment Index, Wednesday – June housing starts; Thursday – Weekly jobless claims, June L.E.I., and July Philadelphia Fed Activity Index. Thus, the big events this week will be the earnings reports.
Earnings reports this week: Today – KMI, LMT, BAC, HOG, LMT are all lower after their reports plus DOW components UNH and GS and JNJ; Tonight – DOW components IBM and CSX; Wednesday – DOW component AXP plus MS and QCOM; Thursday – DOW components MSFT, TRV and V plus ABT, EBAY, UNP, PM and COF; Friday – DOW component GE plus HON, SLB and CL. Earnings were higher by 14% in the first-quarter and are projected to be ahead by 7% in the second-quarter.
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.