Midday Comment — June 19, 2019
DJIA: 26,496.56, up 31.02
S&P 500: 2,918.30, up 0.55
Nasdaq Composite: 7,955.07, up 1.19
Stocks Little Changed with Fed in Focus
The major averages are little changed near mid-session as investors await the latest monetary policy updates from the Federal Reserve. The Dow is up 31 points, while the S&P 500 and Nasdaq are both hovering right above the flat line.
Much of the focus remains on the Federal Reserve with market participants anxiously awaiting the policy decision announcement for June’s FOMC meeting at 2:00 pm EST. Fed Chair Jerome Powell’s post-meeting press conference at 2:30 pm EST will also garner attention. Consensus estimates call for the central bank to leave interest rates unchanged but investors will look for clues that policymakers are willing to cut interest rates to prolong the economic expansion. Treasuries are weakening ahead of the announcement, with the yield on the benchmark 10-year note up three basis points to 2.09%. On the data front, a report showed that mortgage applications declined 3.4% in the most recent week after jumping 26.8% in the prior period.
Gains in the Financials and Health Care groups are offsetting the losses in Materials and Consumer Staples near midday. In earnings news, Adobe is advancing 3.3% after the software maker topped analyst estimates on both the top and bottom line and maintained its full-year guidance.
Breadth is even on issues on the NYSE and positive on issues by 9:7 on the Nasdaq. Composite NYSE volume is more than 1.2 billion shares.
In commodities, WTI crude is falling 0.5% to $53.64/barrel despite an update from the Department of Energy showing crude stockpiles fell more than anticipated in the most recent week.
Opening Comment — June 19, 2019
S&P 500: 2,917.75
Nasdaq Composite: 7,953.88
Futures little changed; Fed in focus
The major averages are poised to open little changed as investors await the latest monetary policy updates from the Federal Reserve. The Dow and S&P 500 are both slightly positive while the Nasdaq 100 is up 0.1% in pre-market action.
Yesterday, U.S. equities rallied as strong gains in Industrials and semiconductors provided a tailwind to the market. The boost in sentiment was attributed to positive trade updates ahead of next week’s planned meeting between President Trump and Chinese President Xi at the G-20 summit. The Federal Reserve is in focus today as market participants are anxiously awaiting the conclusion to June’s FOMC meeting. Consensus estimates call for the central bank to leave interest rates unchanged but investors will look for clues that policymakers are willing to cut interest rates to prolong economic expansion. Treasuries are weaker in early trading with the yield on the benchmark 10-year note up two basis points to 2.08%.
Overseas, European stocks are mixed as the STOXX 600 is off 0.1% while the DAX is rising by the same amount in Germany. Overnight in Asia, positive trade updates helped Hong Kong’s Hang Seng rally 2.6% while the Shanghai Composite jumped nearly 1%. Elsewhere, Australian stocks closed at an 11-year high while Japan’s Nikkei 225 added 1.7%.
In earnings news, Adobe is advancing 4.1% after the software maker topped analyst estimates on both the top and bottom line and maintained its full-year guidance. In commodities, WTI crude is up less than 0.1% to $53.92/barrel ahead of this morning’s inventory update from the Department of Energy.
Closing Comment — June 18, 2019
DJIA: 26,465.54, up 353.01
S&P 500: 2,917.75, up 28.08
Nasdaq Composite: 7,953.88, up 108.86
Stocks Advance on Positive Trade Updates
The major averages finished higher Tuesday as positive trade updates boosted investor sentiment. The Dow jumped 353 points while the S&P 500 advanced 1.0%. The Nasdaq Composite climbed 1.4%.
The sharp uptick in stocks was attributed to President Donald Trump’s comments that he had positive talks with Chinese President Xi Jinping ahead of their proposed meeting at the upcoming G-20 summit. Bond markets were also in focus, with global sovereign debt rallying on the possibility of fresh monetary easing for the Eurozone. European Central Bank President Mario Draghi signaled an economic stimulus “in the absence of any improvement” to the outlook for growth and inflation. The comments sent the yield on the German 10-year bund slumping to a fresh record low of -0.30%.
U.S. Treasury prices followed their global counterparts higher, with the yield on the 10-year note down three basis points to 2.06% ahead of tomorrow’s highly anticipated Fed policy decision. On the data front, housing starts dipped 0.9% in May, worse than the expected 0.3% uptick. Separately, building permits rose 0.3% last month. In commodities, WTI crude surged 4.2% to $53.11/barrel following the positive trade updates.
The Industrial sector, which has been viewed as a proxy for trade sentiment, paced the gains today as the group added 1.9%. Notable outperformers included shares of Boeing and Caterpillar which added 5.4% and 2.4% respectively. Technology stocks also provided a tailwind to equity markets as NVIDIA jumped 5.4%. In corporate news, social media giant Facebook announced the launch of its own cryptocurrency, which will be called “Libra”.