Trump Gets to Work, Markets Cringe
Uncertainty about new administration does not play into stocks’ hand
Stocks on Wall Street traded down yesterday as Donald Trump started his first work week as the leader of the free world. Trump met with the CEOs of leading American companies yesterday, promising to drastically cut regulation that hinders business activity. On his first day in office, Trump also, with one stroke of the pen, terminated the 12-member transatlantic trade agreement, giving traders ample reason to cast doubt about the durability of the sharp rally that followed the elections. Trump, thereafter, announced that he hopes to renegotiate the North American Free Trade Agreement (NAFTA) with Canada and Mexico. In summary for the day, the S&P 500 shed 0.27%, the NADSAQ closing negligibly off by 0.04%.
Earlier in the trading day, Trump met with the heads of a dozen prominent American manufacturing companies in the White House, conveying that he plans on cutting regulation and lowering corporate taxes to accelerate economic growth. Later on in the week, Trump will meet with the CEOs of the top American automobile and construction companies.
The rally after the elections led Wall Street to record a series of historic highs, the rally though halting of late with the S&P 500 recording moderate losses over the last few weeks as investors started to voice concern about the potential offshoots of Trump’s isolationist trade policy. On a technical basis, the situation remains the same, the Dow Jones stuck in a narrow trading range over the last 2 months, cordoned off by the 20,000 point level from above and the 19,750 point level from below. Concern is growing among investors and the narrow trading range defining the major market indexes leaves the market vulnerable to more extensive losses.
The UUP index which tracks dollar performance against a basket of world currencies fell to a 7 week low of 100.18 point. On the heels of the continued declines, precious metals – and first and foremost, gold – climbed to a 2-month high. The ETF for gold mines, the GDX, soared 3%.
The energy sector (XLE) closed off 1.06%, making it the worst performing sector of the 11 on the S&P 500, while crude prices fell on the background of signs of a strong recovery in the number of American rigs in operation. Halliburton (HAL) weighed on the sector with sharp losses of 2.9%, after the world’s second large oil field service provider reported a larger than expected loss for last quarter.
Qualcomm (QCOM) toppled 12.7% to the $54.88 level after Apple (AAPL) submitted a huge $1 billion lawsuit against the chipmaker this past Friday. Yesterday, the company suffered its worst trading day since November ’15 – making it the biggest weight on both the S&P 500 and the NASDAQ.
On the S&P 500, 16 stocks rose to new 52-week highs, 6 dipping to new yearly lows; on the NASDAQ, 79 stocks recorded new 52-week highs, 41 falling to new yearly lows.
About 6.15 billion shares changed hands on U.S. exchanges, in line with the daily average over the last 20 trading days.
Tuesday: Wall Street is now waiting for further detail about tax rates and is digesting the developments revolving Trump’s trade policy, traders, in the meantime keeping their eyes on the lookout for today’s economic reports in hopes of seeing further signs of U.S. economic growth. The question is whether the economy can continue improving irrespective of the Trump administration’s policies.
Real estate and manufacturing figures are expected to be released today before closing in advance of key reports on durable goods orders and economic growth (GDP) that will be released on Friday.
December’s new home sales are expected to have recorded a slight decline to an annualized pace of 5.5 million units. In November ’16, the home sales rate of 5.61 million was the fastest clip recorded since 2007.
Markit’s PMI manufacturing index for January is expected to record a reading of 54.5 points, last month’s reading being 54.3 points.
In addition to these figures, traders will carefully track any developments related to Trump’s policies in his second day in office.
This is the second full week of the earnings season. Among the companies reporting today before opening we’ll find MMM, DD, BABA, JNJ, TRV, KMB, LMT, DHI and AKS. After closing, be primed for the numbers of AA, COF, DFS, ISRG and STX.
Tuesday’s Hot Stocks: SE, OXY, NUE, SYMC, KMB, BABA, DD, AKS, YHOO
Have a great trading day!
|Tuesday||10:00||Existing Home Sales||5.55M||Medium|
|Wednesday||9:00||FHFA Housing Price Index||–||Medium|
|Thursday||10:00||New Home Sales||589K||Medium|
|Friday||10:00||Michigan Sentiment – Final||98.0||High|
|JNJ||Johnson & Johnson||AM||Tuesday|
|BABA||Alibaba Group Holding Limited||AM||Tuesday|
|LMT||Lockheed Martin Corporation||AM||Tuesday|
|TRV||The Travelers Companies, Inc.||AM||Tuesday|
|DD||E. I. du Pont de Nemours and Company||AM||Tuesday|
|TXN||Texas Instruments Incorporated||PM||Tuesday|
|COF||Capital One Financial Corporation||PM||Tuesday|
|STX||Seagate Technology plc||PM||Tuesday|
|NSC||Norfolk Southern Corporation||AM||Wednesday|
|STT||State Street Corporation||AM||Wednesday|
|UTX||United Technologies Corporation||AM||Wednesday|
|BA||The Boeing Company||AM||Wednesday|
|WDC||Western Digital Corporation||PM||Wednesday|
|LVS||Las Vegas Sands Corp.||PM||Wednesday|
|CCI||Crown Castle International Corp.||PM||Wednesday|
|LRCX||Lam Research Corporation||PM||Wednesday|
|VRTX||Vertex Pharmaceuticals Incorporated||PM||Wednesday|
|CTXS||Citrix Systems, Inc.||PM||Wednesday|
|NOC||Northrop Grumman Corporation||AM||Thursday|
|SWK||Stanley Black & Decker, Inc.||AM||Thursday|
|SHW||The Sherwin-Williams Company||AM||Thursday|
|TROW||T. Rowe Price Group, Inc.||AM||Thursday|
|MJN||Mead Johnson Nutrition Company||AM||Thursday|
|RCL||Royal Caribbean Cruises Ltd.||AM||Thursday|
|F||Ford Motor Company||AM||Thursday|
|BMY||Bristol-Myers Squibb Company||AM||Thursday|
|LUV||Southwest Airlines Co.||AM||Thursday|
|DOW||The Dow Chemical Company||AM||Thursday|
|POT||Potash Corporation of Saskatchewan Inc.||AM||Thursday|
|PYPL||PayPal Holdings, Inc.||PM||Thursday|
|JNPR||Juniper Networks, Inc.||PM||Thursday|
|MXIM||Maxim Integrated Products, Inc.||PM||Thursday|
|GD||General Dynamics Corporation||AM||Friday|
|NEE||NextEra Energy, Inc.||AM||Friday|
|HON||Honeywell International Inc.||AM||Friday|
|AAL||American Airlines Group Inc.||AM||Friday|
|Statues||Date Close||Profit \ Loss||#||Date||Stock||Long \Short||Statues||Date Close||Profit \ Loss|
Today’s Picks – Swing “New-York Strategy
No.1 – FAST
|Sector||Services | Industrial Equipment Wholesale|
No.2 – WMB
|Company Name||The Williams Companies|
|Sector||Basic Materials | Oil & Gas Pipelines|
|Earnings Date||15 Feb|