Opening Comment — August 22, 2017
S&P 500: 2,428.40
Nasdaq Composite: 6,213.10
Stock index futures are firmly higher Tuesday morning. The Dow and S&P 500 are advancing 0.3% while the Nasdaq is jumping 0.5% in pre-market action.
The major averages are strengthening while government bonds and gold are selling-off as a perceived “risk on” trade is taking hold before the open. With a light slate for earnings and economic news, investors will be looking ahead to the Kansas City Fed’s annual summit in Jackson Hole, Wyoming which begins Thursday. Updates on the data front Tuesday will include FHFA House Price Index and the Richmond Fed’s manufacturing index.
In earnings, Medtronic is off 2.4% to $81.56 while luxury home builder Toll Brothers is losing 2.3% to $37.40 as each company missed Wall Street revenue expectations. Coty is down 7.6% to $18.07 as the cosmetics company missed consensus profit projections. Shoe retailer DSW is jumping 17% to $18.32 after the company reported an unexpected rise in same store sales and announced a $500 million stock buyback.
The Euro STOXX 600 is advancing 0.5% this morning with miners pacing the gains in sympathy with higher commodity prices. In Asia, Japan’s Nikkei 225 fell 0.1% for its fifth-straight daily decline while the Hang Sang in Hong Kong rode strength in Technology stocks to a 0.9% advance.
Treasuries are lower along the curve with the benchmark 10-year note off 8/32 to yield 2.21%. In commodities, NYMEX WTI crude is essentially flat at $47.37/barrel. COMEX gold is slipping 0.6% to $1283.20/ounce while the dollar is rebounding against the yen and euro.
Midday Comment — August 22, 2017
DJIA: 21,856.87, up 153.12
S&P 500: 2,447.10, up 18.73
Nasdaq Composite: 6,283.95, up 70.82
Stocks are higher near mid-session on Tuesday. The Dow is up 153 points to 21856. The S&P 500 is adding 18 points to 2447 and the Nasdaq Composite is gaining 70 points to 6283.
The major averages are advancing as investors look to shake off the largest two-week decline of the year. On Thursday, attention will turn to central banks as monetary leaders from around the world gather for the annual Jackson Hole Economic Policy Symposium. In economic news, June’s FHFA House Price Index marked an increase of 0.1% missing analyst estimates for a rise of 0.5%. Separately, the Richmond Fed manufacturing index beat Street expectations for August, coming in at 14 versus the projected 10.
Eight of 11 sectors in the S&P 500 Index are trading in positive territory. Information Technology is leading advancers with Applied Materials rising 2.5% to $44.28 as third-quarter earnings and guidance topped analyst estimates. In the Material space, BHP Billiton is adding 1.5% to $41.52 amid news it intends to exit its US shale business. Elsewhere, shoe retailer DSW is jumping 18.4% to $18.59 following an unexpected rise in same-store-sales and an announced share repurchase program.
Breadth is positive on issues by a margin of 2-1 on both the NYSE and Nasdaq. Composite NYSE volume is more than 1.0 billion shares.
Treasuries are declining with the benchmark 10-year note down 5/32 to yield 2.20%. In commodities, NYMEX WTI crude is adding 0.5% to $47.60/barrel. In FOREX, the Dollar Index is gaining 0.3%.
Closing Comment — August 22, 2017
DJIA: 21,899.89, up 196.14
S&P 500: 2,452.51, up 24.14
Nasdaq Composite: 6,297.48, up 84.35
Stocks climbed higher on Tuesday. The Dow added 196 points to 21899. The S&P 500 gained 24 points to 2452 and the Nasdaq Composite advanced 84 points to 6297.
The Dow experienced its best session since April as optimism concerning tax reforms buoyed equities and sent government bonds and gold prices lower. According to a report from Politico, the Trump administration and key lawmakers have reportedly found common ground on how to approach tax reform. On the data front, June’s FHFA House Price Index marked an increase of 0.1%, missing analyst estimates for a rise of 0.5%.
Ten of 11 sectors in the S&P 500 finished in positive territory. Financials and Technology stocks paced the gains while Real Estate shares lagged after the FHFA release. Boeing led gainers on the Dow, rising 1.7% $239.75 after the company received a government missile contract. Shoe retailer DSW rose 17.5% to $18.44 after it posted same-store sales growth for the first time in six quarters. Coty fell 9.4% to $17.71 while Medtronic lost 2.1% to $81.76 after each company missed Wall Street revenue expectations.
Breadth was positive on issues by 3-1 on the NYSE and by 5-2 on the Nasdaq. Trading volume on the S&P 500 was 7% below its 30-day moving average.
Treasuries slid with the benchmark 10-year note losing 9/32 to yield 2.21%. In commodities, NYMEX WTI crude rebounded 0.6% at $47.64/barrel. COMEX gold slid 0.4% to $1285.10/ounce while the U.S. Dollar Index advanced 0.4% against its peers.
Wells Fargo Investment Institute, Inc., is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company.