Nasdaq closes at a record high ahead of major tech earnings

U.S. stocks closed higher Thursday ahead of major tech company earnings.

The Dow Jones industrial average and the S&P 500 struggled to hold opening gains, while the tech-heavy Nasdaq composite closed at a record high.

Ahead of the open, NBCUniversal parent Comcast reported better-than-expected quarterly profit of 53 cents per share and revenue also above forecasts. Shares climbed nearly 4 percent, tracking for their best day since Feb. 3, 2016

Information technology was among the top S&P 500 performers, while energy was the worst, dropping more than 1 percent as oil prices fell about 2 percent on oversupply concerns.

U.S. crude oil futures for June delivery hit their lowest since March 29 and settled at $48.97 a barrel, tumbling 1.3 percent.

“We remain hard pressed to get excited for the prospect of higher oil prices in a sub-two percent GDP growth environment as production in the U.S. continues to increase and rig counts rise,” Bell said. “Incremental demand from emerging markets would be necessary to more substantially drive down inventory levels.”

U.S. stocks traded in a narrow range Thursday 

U.S. stocks closed higher Thursday ahead of major tech company earnings.

The Dow Jones industrial average and the S&P 500 struggled to hold opening gains, while the tech-heavy Nasdaq composite closed at a record high.

Comcast, PayPal and Amazon.com were among the greatest contributors to gains in the Nasdaq.

Ahead of the open, NBCUniversal parent Comcast reported better-than-expected quarterly profit of 53 cents per share and revenue also above forecasts. Shares climbed nearly 4 percent, tracking for their best day since Feb. 3, 2016

Information technology was among the top S&P 500 performers, while energy was the worst, dropping more than 1 percent as oil prices fell about 2 percent on oversupply concerns.

U.S. crude oil futures for June delivery hit their lowest since March 29 and settled at $48.97 a barrel, tumbling 1.3 percent.

While the summer driving season has historically helped drive oil prices higher, domestic inventory levels “remain elevated by historical standards,” Lindsey Bell, investment strategist at CFRA, said in a Thursday note to clients.

“We remain hard pressed to get excited for the prospect of higher oil prices in a sub-two percent GDP growth environment as production in the U.S. continues to increase and rig counts rise,” Bell said. “Incremental demand from emerging markets would be necessary to more substantially drive down inventory levels.”

Technology, a key part of the so-called growth trade, has led the U.S. market rally so far this year.

The major U.S. stock indexes closed marginally lower Wednesday, holding within 1 percent of their intraday highs, after the announcement of President Donald Trump’s tax plan. Top officials called the proposal the “biggest tax cut” in U.S. history but remained vague on highly anticipated details such as the tax rate on repatriation of overseas profits.

“I just think we’re a little extended after the two-day move [earlier this week],” said Peter Coleman, head trader at Convergex. “Everybody’s anticipating the tax plan. Although they gave some detail it wasn’t very specific.”

Durable goods orders rose a less-than-expected 0.7 percent in March. Weekly jobless claims increased more than expected to 257,000. Pending home sales fell 0.8 percent in March.

Treasury yields traded mostly lower. The euro held below $1.090.

The European Central Bank kept its benchmark interest rate at zero percent and monetary policy unchanged. ECB President Mario Draghi said in an opening statement that net asset purchases at a new monthly pace of 60 billion euros (nearly $65.6 billion) would “run until the end of December 2017, or beyond, if necessary.”

Dollar index edges up, but poised for losing month

The dollar edged up in Asian trading on Friday but was on track for a losing month against a basket of currencies, while the euro shed some of its monthly gains after the European Central Bank maintained its easing bias.

The dollar index, which tracks the greenback against a basket of six major rivals, edged up 0.1 percent to 99.193, but down 0.8 percent for the week and 1.2 percent for April.

The euro was down 0.1 percent at $1.0865, but up 1.3 percent for the week and 2 percent for the month. ECB chief Mario Draghi said on Thursday after the central bank’s policy meeting that removal of the bank’s easing bias was not discussed, stressing the barriers the ECB still faces before beginning to tighten its ultra-loose financing conditions.

However, he also said that euro zone’s recovery was increasingly solid and downside risks had diminished.

Against its Japanese counterpart, the dollar was steady on the day at 111.30 yen, up 2 percent for the week but still down 0.1 percent for the month.

“The Japanese Golden Week holidays are ahead, and investors have already adjusted their positions,” said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo.

Tokyo markets will be closed for three days from May 3 for a string of holidays known as the Golden Week, and some market participants take additional time off.

The dollar was steady against the Swedish crown at 8.8422 crowns per dollar, having jumped on Thursday after Sweden’s Riksbank extended its bond-buying and predicted its first interest rate hike in mid-2018, later than previously projected.

S&P 500 Futures: Trumps Tax Plan And More RIPS DIPS

The S&P is doing exactly what it has been doing for the last eight years, making new highs. On October 8th 2007, the E-Mini S&P 500 futures made a new all time high at 1586.75, and along came the U.S credit crisis. The ES did not get back to its ‘high water mark’ until April 8, 2013, 5 years and 6 months later. Since taking out the old high, the S&P has made new all time highs in 27 of the last 48 months. If a new high is made this month, it will be 28 of the last 48 months that the S&P made a new high.

The S&P has had an astonishing 275% run since it’s 666 credit crisis lows. Since the Federal Reserve lowered interest rates to zero and implemented three separate quantitative easing programs, followed by “Operation Twist”, thus marking up $4.5 trillion in debt, it’s been ‘one new high after another’ in the U.S. equity markets. Whether you are a bull or a bear, there is no denying the overall price action… Make a new high, get the public to get short into an event, and then take back half or more of the decline in just a few days.

Yesterday was a big day of rips and dips, with the Trump tax cut headlines hitting the tape at 1pm cst. The ES traded to 2394.75 just after 10:30, up 9.75 handles, and then sold off down to 2386.25 just before 11:00. The ES then double topped at 2392.00, pulled back a little, and popped up to 2393.75. From there, the ES dropped back to where it previously held at 2389.25 before rallying back up to 2393.50, just 1 tick below the earlier high. After that, the futures sold off down to 2387.50, rallied back up to another lower high at 2392.25, and then sold off down to 2387.00 as more of Trumps tax plan hit the tape.

The ES opened the day on an uptick, trading up to the 2394.00 area, and then sold off into the close, settling at 2382.75, down 2.25 handles. In the end, it was a day filled with a lot of ups, and a lot of downs. In terms of the day’s overall volume, 1.49 million ESM17’s traded. In terms of the S&P’s overall tone, the future’s still seem to have room on the upside. We have seen this before; when the futures are close to a new high, they tend to sell off a little bit, and then creep back up.

Oil prices fall after report shows large jump in US fuel stockpiles

Oil prices fell on Thursday, weighed down by oversupply, but losses were limited by expectations that major exporters would agree to extend production cuts to try to rebalance the market.

Benchmark Brent crude was down 57 cents, or 1.1 percent, at $51.25 a barrel by 7:30 a.m ET (1130 GMT), about 9 percent below this month’s peak.

U.S. light crude was down 54 cents, or 1.1 percent, at $49.08.

Traders reported ample supplies in all key markets despite efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to cut output by 1.8 million barrels per day (bpd) in the first half of the year to tighten the market and prop up prices.

OPEC is discussing extending its cuts into the second half of the year, but the group has an uphill task as oil inventories are near record levels in many parts of the world.

U.S. gasoline prices were down nearly 2 percent on Thursday and have fallen more than 8 percent this month.

“U.S. commercial stocks increased by more than 6.5 million barrels last week,” said Tamas Varga, senior analyst at London brokerage PVM Oil Associates.

“Stock rebalancing has been put on hold as U.S. commercial oil inventories have jumped.”

U.S. crude oil production is also rising, up 10 percent since mid-2016 at 9.27 million bpd.

“We see a risk for a weaker oil price towards the end of the year … because shale is delivering so much oil,” Jarand Rystad told Reuters.

Still, with an expectation that OPEC will extend its production cuts to cover all of 2017, analysts said there was support for prices around current levels.

Brent oil looks neutral in a range of $51.30 to $52.32,” said Reuters technical commodities analyst Wang Tao.

Gold dips on French election while security tensions support

Gold prices fell on Tuesday as markets grew less concerned that far-right leader Marine Le Pen would win the French presidential election, increasing investor appetite for risky assets such as stocks while denting bullion.

Spot gold was down 0.86 percent to $1,264.22 per ounce. U.S. gold futures for June delivery were down $10.30 to settle at $1,267.20.

Business-friendly centrist Emmanuel Macron won the first round of the French vote on Sunday and opinion polls indicated less support for Le Pen.

 The news had sent bullion prices to their lowest since April 11 in the previous session, at $1,265.90.

“We’ve moved from having multiple numbers of positive drivers for gold last week when yields were on the defensive and we had multiple geopolitical risks,” said Ole Hansen, head of commodity strategy at Saxo Bank.

“But now with the French election (first round) behind us, there is a bit of a surge of risk-on coming back to the market. The main worry was a strong performance by Le Pen.”

Gold is often seen as an alternative investment during times of political and financial uncertainty.

Heightened security risks provided some support. North Korea conducted a live-fire exercise on Tuesday as a U.S. submarine docked in South Korea in a show of force amid concern over Pyongyang’s nuclear and missile programs

Hansen said gold would trade cautiously this week before a Friday deadline for the U.S. Congress to pass a spending bill funding the government through September or risk a government shutdown.

Asset manager ETF Securities said in a note said it expects “modest upside” for platinum given “expectations for continued global recovery in growth and manufacturing, and a record discount to the gold price.”

“The downside risks for platinum appear more limited than the potential upside risks,” it said.

Nasdaq closes above 6,000 in earnings-fueled rally, Dow climbs more than 200 points

  • The Nasdaq composite soared above 6,000 for the first time ever.
  • The Dow jumped more than 200 points, briefly breaks back above 21,000.
  • “Earnings and tax reform are the main story” in the market, says Baird’s Bittles.U.S. equities rose sharply on Tuesday as solid quarterly reports from several large-cap companies rolled through.

    The Nasdaq composite jumped about 0.7 percent, sending the index above 6,000 for this first time ever.

    “It’s certainly a psychological factor,” said Jeff Carbone, managing partner of Cornerstone Financial Partners. “It took us many years to get back above 5,000 and now we’re at 6,000. But you’ve got to be careful.”

     He noted that about 40 percent of the index is being driven by five companies: Amazon, Facebook, Netflix, Alphabet and Apple. “If we see a downturn in those names,” the index could be in trouble.

    The Dow Jones industrial average rose about 230 points, with Caterpillar and McDonald’s contributing the most gains and briefly broke above 21,000. The S&P 500 advanced 0.6 percent, with materials rising more than 1 percent to lead advancers.

    “I think we’ve come to believe that Q1 is soft because of some reason that economists or market analysts haven’t been able to pinpoint,” said Kim Forrest, senior equity analyst at Fort Pitt Capital. “That doesn’t seem to be happening now.

    U.S. equities rose sharply on Tuesday as solid quarterly reports from several large-cap companies rolled through.

    The Nasdaq composite jumped about 0.7 percent, sending the index above 6,000 for this first time ever.

    “It’s certainly a psychological factor,” said Jeff Carbone, managing partner of Cornerstone Financial Partners. “It took us many years to get back above 5,000 and now we’re at 6,000. But you’ve got to be careful.”

    He noted that about 40 percent of the index is being driven by five companies: Amazon, Facebook, Netflix, Alphabet and Apple. “If we see a downturn in those names,” the index could be in trouble.

    The Dow Jones industrial average rose about 230 points, with Caterpillar and McDonald’s contributing the most gains and briefly broke above 21,000. The S&P 500 advanced 0.6 percent, with materials rising more than 1 percent to lead advancers.

    “I think we’ve come to believe that Q1 is soft because of some reason that economists or market analysts haven’t been able to pinpoint,” said Kim Forrest, senior equity analyst at Fort Pitt Capital. “That doesn’t seem to be happening now.”

    Here are some of the firms that posted quarterly results before the bell:

    • Caterpillar: posted EPS of $1.28 and sales of $9.822 billion, versus expected EPS of 62 cents and $9.271 billion revenue forecast.
    • McDonald’s: posted EPS of $1.47 and revenue of $5.68 billion, versus expected EPS of $1.33 and sales of $5.53 billion.
    • 3M: posted EPS of $2.16 and revenue of $7.685 billion, versus expected EPS of $2.06 and sales of $7.472 billion.
    • DuPont: posted EPS of $1.64 and sales of $7.743 billion, versus expected EPS of $1.39 and revenue of $7.504 billion.

    “Earnings thus far have been good,” said Peter Cardillo, chief market economist at First Standard Financial. “That’s a good sign that Corporate America is on a renewed path toward growth.”

    More than 190 S&P components are expected to have reported by the end of the week. Other big names scheduled to release quarterly results this week include Boeing, Amazon, Alphabet, Microsoft and General Motors.

    The major U.S. stock indexes soared on Monday after the first round of the French presidential election went as most investors expected. Centrist Emmanuel Macron advanced to the runoff against far-right candidate Marine Le Pen. The runoff is scheduled for May 7.

    “I have to say I was surprised because what happened with Marine Le Pen is what we were expecting. So why get got a bump off that is interesting,” said Maris Ogg, president at Tower Bridge Advisors. “But I think that removed a big cloud [over the market] and people are starting to focus on the fundamentals again.”

    The Dow Jones industrial average rose 232.23 points, or 1.12 percent, to close at 20,996.12, with Caterpillar leading advancers and Verizon the top decliner.

    The S&P 500 gained 14.46 points, or 0.61 percent, to close at 2,388.61, with materials leading nine sectors higher and telecommunications and utilities lagging.

    The Nasdaq advanced 41.67 points, or 0.7 percent, to end at 6,025.49.

    About three stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 930.29 million and a composite volume of 3.987 billion at the close.

S&P 500 Futures: April Options Expiration ‘Squeeze’

In its usual ‘take no prisoners’ style, the S&P 500 futures (ESM17:CME) was up over 1% at 1:00 pm CT yesterday. After falling 19 handles from high to low on Wednesday, U.S. indices were all sharply higher. The Dow Jones futures that closed down 109 points Wednesday, closed up 211 points yesterday. The Nasdaq, which was the firmest of the indices, closed up 2.75 points Wednesday, and up 49.75 points yesterday. It is exactly as the Pit Bull says; the S&P is like water in the bath tub, push the water one way then push it the other way.

We talked a lot about what drives the S&P from selling off to going back up so quickly, and I think it has a lot to do with how the algos. Once the selling in the ES dries up, the big investment firms and mutual funds start buying. There are five main concerns right now, the first one being whether or not Q1 earnings will support the lofty prices of stocks. Will the economic numbers show weak economic expansion? Also, the French election and geopolitical strife, and lastly, signs that the Trump trade may have run its course for now.

 

It’s hard to think that it will be that easy, especially as the stock markets brace for the slow and seasonally weak period of May. Sure, “sell in May” has not showed up the last couple years, but with all the risk that seems to be keeping a lid on the equity markets, combined with whatever new risks may occur over the course of the months to come, it won’t be easy for the S&P 500 to push above and find support at 2400. For now, it seems the personality of this market is two sided, and we expect to see volume decrease greatly above 2350 as the market becomes sluggish, and then increase below 2350.

Dogs Of The Dow Falling Further Behind

It has been several months since updating the performance of the Dogs of the Dow investment strategy. The strategy is one where investors select the ten stocks that have the highest dividend yield from the stocks in the Dow Jones Industrial Average (DJIA) after the close of business on the last trading day of the year. Once the ten stocks are determined, an investor invests an equal dollar amount in each of the ten stocks and holds the basket for the entire next year. The popularity of the strategy is its singular focus on dividend yield. The strategy is somewhat mixed from year to year in terms of outperforming the Dow index though. Over the last ten years, the Dogs of the Dow strategy has outperformed the Dow index in six of those ten years.

As we noted in our early February post, it is important for investors utilizing the strategy to be aware of the strategy’s bets in terms of stock and sector exposure. Through Friday’s close, the 2017 Dow Dogs return of 2.0% trails the return for both the Dow Jones Industrial Average Index and the S&P 500 Index, 4.6% and 5.4%, respectively.

Dow ends about 170 points higher

U.S. stocks rose on Thursday as more companies released quarterly results while Treasury Secretary Steven Mnuchin said the administration was close to “major tax reform.”

Mnuchin, who this week backed off of his earlier goal of passing tax reform by August, said the White House will unveil a plan “very soon.” However, the Trump administration previously set deadlines for releasing its tax plan that it did not meet.

The Dow Jones industrial average rose more than 150 points, with Goldman Sachs and American Express contributing the most gains. The credit-card giant reported better-than-expected first-quarter earnings, lifted in part by higher spending numbers from card members.

“Corporate America is hanging in there despite softening economic data,” said Lindsey Bell, investment strategist at CFRA. “I know Verizon was a disaster but you got some pretty good results out of American Express and CSX.”

Verizon, another Dow member, missed the mark on both earnings and revenue. The company attributed a 5.1 percent drop in sales to decreased overage revenue, lower postpaid customers in the quarter and continued promotional activity.

Oil biggest weekly drop in a month

Oil prices edged lower on Friday, on course for the biggest weekly drop in a month, over doubts that an OPEC-led production cut will restore balance to an oversupplied market.

Front-month Brent crude futures were at $52.87 a barrel at 0820 GMT, down 12 cents from their last close and set for a 5.4 percent weekly drop, the most since the week of March 10.

Front-month U.S. crude futures, which rolled over on Friday, were at $50.61 a barrel, down 10 cents and on course for a 4.8 percent weekly decline, also the most since March 10.

 Saudi Arabia and Kuwait, key members of the Organization of the Petroleum Exporting Countries, favour extending their production-limiting deal with non-member producers into the second half of the year.