What Would You Do with $1 Trillion?
Market Rally Fueled by Huge $1 Trillion Infrastructure Spending Bill
Stocks on Wall Street rallied on Tuesday to new historic highs in the wake of a huge – and aggressive – infrastructure spending platform valued at $1 trillion, which surprise, surprise, wasn’t proposed by Donald Trump but rather Democrats on Capitol Hill who wanted to spearhead fiscal stimulus to their own liking. The rally convinced traders that there’s still room for more gains, the new highs putting the ball back in the bulls’ hands.
Trump, for his part, also had his hands full, meeting with automobile execs, prodding them to increase U.S. manufacturing. Beyond that, Trump’s busy day also included the first outcropping of his vendetta against the Environmental Protection Agency (EPA), the emphasis being cutting regulation.
In summary for the day, the Dow Jones tacked on 0.6%, the S&P 500 rising 0.7%, with the NASDAQ being the strongest of the three with a rally of 0.9%. The Russell 2000 soared 1.6%. Assets considered safer shores like gold – which soared last week – recorded losses yesterday. Gold (GLD) shed 0.4%. Crude (USO), though, ended up 0.8%.
One of the stocks that stood out in yesterday’s trading was ATI which soared 31.1%, after the company surprised analysts with a smaller than expected loss, while simultaneously releasing strong guidance for the rest of the year, management weighing in on demand for next generation jet engines. GoPro (GPRO) rallied 7.8% after being upgraded by the analysts at Pacific Crest – that, coupled with concern about a short squeeze. The Chinese online retail giant, Alibaba, rose 3.1% after its results for last quarter trounced analysts’ top-line forecast by 8%.
On the flipside, the communication company, Verizon (VZ) lost altitude, plummeting 4.4% after its earnings results and cellular communication operations fell short of expectations, despite its good revenue numbers. The company’s future guidance also disappointed investors. Lockheed Martin (LMT) fell 2.2% on the background of weak guidance. Johnson & Johnson (JNJ) fell 1.9% on the heels of disappointing sales numbers.
On the economic front, December’s existing home sales came to an annualized 5.5 million units, slightly beneath expectations, while the combination of rising mortgage costs and rising home prices along with low supply led to price stagnation.
As of now, despite yesterday’s gains, stocks are still well-bound in a narrow price range. The technical indicators continue to signal losses to come, breadth narrowing and sentiment off the charts being weak. “Smart money” traders are simply yearning to see a rise in volatility. The fact of the matter is that last month underscored the narrowest trading range on the Dow since the year, 1900.
What enables, of course, the low level volatility is the Fed’s historic cheap money experiment, a policy expected to change this year. The central bank, which raised interest rates just twice over the last 10 years, is expected, at present, to hike rates three times this year.
Furthermore, Fed Chairwoman, Janet Yellen has changed the tone of her rhetoric of late. Before the elections, when Trump blamed her for keeping rates low to push up stock prices, she announced that she’s ready to let the economy heat up for a period of time – while just a few months later, she changed her viewpoint. Investors will be sure to remind her of the tough stance she had taken when the Fed holds its monetary policy meeting at the end of the month.
Wednesday: Wall Street is being roused again and traders now want to see yesterday’s rally continue into today, something that would be reminiscent of the shape the rally took right after the elections. On Wednesday, traders will go up against a flood of earnings reports; before opening, BA, ABT, UTX, STT, NSC, and TXT will be reporting, along with other firms. After closing, be primed for FFIV, T, LRCX, LVS, MCK, WDC and CTXS.
Until now, 70% of the S&P 500 companies that have reported have hit their earnings forecasts, with average earnings growth at 6.7%.
Today’s Economic Diary will feature the FHFA home price index at 9:00 N.Y. time, crude inventory numbers to be released by the U.S. Department of Energy at 10:30.
Wednesday’s Hot Stocks: BA, ABT, STT, TXT, UTX, CREE, STX, BOBE, CA
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|
Today’s Picks – Day Trading
New York Strategy Swing
|Statues||Date Close||Profit \ Loss|
Today’s Picks – Swing “New-York Strategy
|Company Name||The Procter & Gamble Company|
|Sector||Consumer Goods | Personal Products|