Renewed hope about tax cuts, first thing in the morning, sent Wall Street sharply higher. Stocks on Wall Street rallied higher on Tuesday, each of the 3 major indexes recording their best gains in over a week against the backdrop of positive comments made by legislators about tax reform and the debt ceiling, which sent investor optimism soaring.
It could be that half of yesterday’s gains were founded on the speculation that the White House and Republican Party are making significant progress on tax reform legislation. Trading volumes are anemic at this time of the year, meaning that even skimpy buying has a disproportionate effect on stock movement.
House Speaker Paul Ryan told CNN that it would be easier to pass tax reform than health reform – a debacle – because of the consensus in the Republican Party. On another front, Senate Majority Leader, Mitch McConnell, told Congress that there’s “zero chance” it will fail to raise the debt ceiling in September, averting concern that the federal government could shut down or become insolvent.
Yesterday’s gains were sweeping, encompassing almost every market sector. The tech sector (XLK) led the gains, with a surge of 1.5%, recording its first day of gains after 4 consecutive losing days.
Daily Summary: The Dow Jones rose 0.9%. The S&P 500 tacked on 0.99%, the NASDAQ jumping 1.36%.
When push came to shove yesterday, 335 stocks recorded new 52-week highs, 300 falling to new yearly lows, making it the first session in 10 trading days with more stocks recording new yearly highs than lows.
Stocks on Wall Street have been doing beautifully, but some of their magical touch has been lost this month. The S&P 500 is up just about 9% on the year, though has shed 0.7% in August.
One of the stocks that stood out yesterday was Boeing (BA), which rallied 1.7% after the company was awarded an Air Force contract for its next intercontinental ballistic missile. The stock also benefitted from the gains that swept the entire security and defense industry after Pres. Trump addressed the war in Afghanistan. In his speech yesterday, Trump stated that a retreat of American forces from Afghanistan would create a vacuum that terrorists could fill instantaneously. “We cannot repeat in Afghanistan the mistake our leaders made in Iraq,” Trump said. Security and defense stocks soared after Trump’s speech, with the ETF on the sector, the ITA, surging 1.2%.
Macy’s (M) took off 4.56%, recording its best day in almost 7 months, after announcing a company reorganization and workforce cut.
DSW rocketed 17.46% higher after the footwear retailer reported a surprise rise in store chain sales.
About 5.24 billion shares changed hands on U.S. exchanges, beneath the 6.28 billion daily average over the last 20 trading days.
Wednesday: Despite the jump in stocks yesterday on the heels of optimism about tax reform, there are many pitfalls ahead, with there being no prospect for tax cuts to materialize prior to October. Yesterday’s movement attests to players being optimistic to some extent that something’s going to happen. It’s still going to be hard; the will, though, is there. Chances, though, are very low that we’ll see any semblance of tax reform be instituted already this year.
What’s next?! The good news is that the market usually does a better job of creating continuity with positive momentum on its side, as opposed to downside momentum. Strong movement, like yesterday, tends to provide a good helping of support. The apprehension about being left behind is still a powerful market driver, fueling the tendency to buy corrections.
Another important factor is the expectation that something market friendly will come out of Jackson Hole over the weekend. The market isn’t expecting anything specific but inherently, likes to be enamored with central banks, investors rejoicing when bankers wax about cutting their balance sheet and hiking rates.
It goes without saying that bears will have their eyes peeled for the next White House scandal which could pique a selloff. Everybody here knows the bit! Trump will cause another media uproar but the market will very quickly shrug it off and refocus on economic matters.
Technically, the market still faces difficulty ahead, but days like yesterday tend to wipe the slate clean. The trading environment isn’t perfect – but until now, the bulls have dug in, chances being favorable that we can still get a few days more on the upside out of them.
Wednesday’s Hot Stocks: CRM, CREE, LZB, INTU, LOW
Have a great trading day!
|Monday||8:30||Chicago Fed National Activity Index||0.22||Medium|
|Tuesday||9:00||FHFA House Price Index||0.5 %||Medium|
|Wednesday||10:00||New Home Sales||610K||Medium|
|Wednesday||10:30||Oil Crude Inventories||–||Low|
|Thursday||Jackson Hole Economic Policy Symposium||–||High|
|Thursday||8:30||Jobless Claims||236 K||Medium|
|Thursday||10:00||Existing Home Sales||5.570 M||Medium|
|Friday||Jackson Hole Economic Policy Symposium||–||High|
|Friday||8:30||Durable Goods Orders||-5.7 %||Medium|
|Friday||10:00||Janet Yellen Speaks||High|
|TOL||Toll Brothers, Inc.||AM||Tuesday|
|LOW||Lowe’s Companies, Inc.||AM||Wednesday|
|EV||Eaton Vance Corp.||AM||Wednesday|
|SQM||Sociedad Quimica y Minera de Chile S.A.||PM||Wednesday|
|TIF||Tiffany & Co.||AM||Thursday|
|SJM||The J. M. Smucker Company||AM||Thursday|
|DLTR||Dollar Tree, Inc.||AM||Thursday|
|SIG||Signet Jewelers Limited||AM||Thursday|
|PSTG||Pure Storage, Inc.||PM||Thursday|
|BRCD||Brocade Communications Systems, Inc.||PM||Thursday|
|ULTA||Ulta Beauty, Inc.||PM||Thursday|
|VEEV||Veeva Systems Inc.||PM||Thursday|
|MRVL||Marvell Technology Group Ltd.||PM||Thursday|
|BIG||Big Lots, Inc.||AM||Friday|
Today’s Picks – Day Trading!
New York Strategy Swing
Today’s Picks – Swing “New-York StrategyMorning Optimism Catapults Wall Street Higher!
No.1 – KORS
|Company Name||Michael Kors Holdings Limited|
|Sector||Consumer Goods | Textile – Apparel Clothing|
No.2 – AAP
|Company Name||Advance Auto Parts|
|Sector||Services | Auto Parts Stores|