Stocks Enter Fourth Quarter With A Bang, NASDAQ Fades To Red, Oil Rallies

At the open, on the first day of trading in the fourth quarter, stocks powered ahead, posting massive gains on the back of President Trump's successful renegotiation of the NAFTA treaty with Mexico and Canada.

It was a giddy start to October, generally a month with plenty of volatility, due partially to funds which tend to close out their books prior to November, short and long term rules of capital gains taxation, and sometimes explosive conditions in the political realm prior to November elections.

On the trade Monday, the divergence pattern which has persisted for more than a year now, appeared again, as the NASDAQ sold off while the Dow and S&P held onto gains. This divergence of mainstream vs. largely tech stocks has been confounding to index and passive investors, as the old world and new have often traded in opposite directions. The solution has been to own some of both sides, with Dow and dividend-paying stocks on one side and speculative, tech stocks on the other.

In such a case, Monday's moves were a win for the old school, as the Dow powered ahead while the NASDAQ soured during the day. Over the long term, the two varieties of stocks have moved up in tandem, producing quality gains this year.

While stocks were hot and bonds stable, the big move of the day was in the oil field, with WTI crude futures up sharply, above 75.50 into the close. The higher price is possibly a reflection of easing of concerns over trade wars, with the new North American agreement at the forefront. In addition, coming sanctions on Iran - which begin on November 4 - are expected to crimp supply. Crude prices are currently trending at four-year highs. If the condition persists, high prices at the pump for consumers could hurt holiday sales, with the big shopping season less than two months ahead.

Dow Jones Industrial Average October Scorecard:

Date	Close	Gain/Loss	Cum. G/L
10/1/18	26,651.21	+192.90	+192.90

At the Close, Monday, October 1, 2018:
Dow Jones Industrial Average: 26,651.21, +192.90 (+0.73%)
NASDAQ: 8,037.30, -9.05 (-0.11%)
S&P 500: 2,924.59, +10.61 (+0.36%)
NYSE Composite: 13,125.35, +42.83 (+0.33%)

Dow Gains One Percent in May; Remains Lower for the Year

Taken alone, May's one percent gain is appealing, given that repetition of that result for each month of the year would produce a 12% annual return, a desirable outcome for just about any investor.

Alas, the stock market is not a linear construct, nor is it without risk. The 13 sessions which showed gains were offset largely by nine days down. May 5th's gain of +332.36 (the best single day of the month) was overshadowed by the May 29 decline of 391.64 points, the largest drop of the month and the biggest decline since the Dow lost 572.46 points on April 6.

Despite the second straight month of gains, the Dow remains lower for the year, though marginally. The Industrials closed at 24,719.22 on December 29, 2017, and the close on May 31 of 24,415.84 is still more than one percent below that level and 2200 points away from the January 23 high of 26,616.71.

Contributing to the less-than-inspiring returns for the month were factors such as political turmoil stemming from the ongoing "Russiagate" investigation of President Trump, his administration and the operatives who helped him get elected in 2016. Also on the downside, the imposition or threat of tariffs on imports from China, and lately, from trading partners Mexico, Canada, and the European Union.

Hanging over the market is the specter of a bear market, which was technically triggered on April 9, when the Dow Transportation Index confirmed the downside shift of the Industrials two months prior.

The positives were less abundant. Low unemployment gives a boost to spirits, but is offset by companies complaining that they cannot fill positions and labor pay that remains stagnant. The on-again, off-again talks with North Korea helps underpin the market, but the president's effort to denuclearize the Korean peninsula has been fraught with complaints from his opponents and outside meddling.

Claims that GDP is improving are marginal, with the second estimate of the first quarter recently lowered from 2.3% growth to 2.2%.

Investors get credit for holding the proverbial line against further losses, such as those suffered in February and March, though one has to wonder if they are pushing on a string in their efforts to keep an overinflated market afloat on a sea of debt and doubt.

With the year nearly half done, a minus sign in front off the Dow year-to-date returns is an ominous sign that 2018 is shaping up as something radically different than last year's outsized gains.

Dow Jones Industrial Average May Scorecard:

Date	Close	Gain/Loss	Cum. G/L
5/1/18	24,099.05	-64.10	-64.10
5/2/18	23,924.98	-174.07	-238.17
5/3/18	23,930.15	+5.17	-233.00
5/4/18	24,262.51	+332.36	+99.36
5/7/18	24,357.32	+94.81	+194.17
5/8/18	24,360.21	+2.89	+197.06
5/9/18	24,542.54	+182.33	+379.39
5/10/18	24,739.53	+196.99	+576.38
5/11/18	24,831.17	+91.64	+668.02
5/14/18	24,899.41	+68.24	+736.26
5/15/18	24,706.41	-193.00	+543.26
5/16/18	24,768.93	+62.52	+605.78
5/17/18	24,713.98	-54.95	+550.73
5/18/18	24,715.09	+1.11	+551.84
5/21/18	25,013.29	+298.20	+850.04
5/22/18	24,834.41	-178.88	+671.16
5/23/18	24,886.81	+52.40	+723.56
5/24/18	24,811.76	-75.05	+648.51
5/25/18	24,753.09	-58.67	+589.84
5/29/18	24,361.45	-391.64	+198.20
5/30/18	24,667.78	+306.33	+504.53
5/31/18	24,415.84	-251.94	+252.59

At the Close, Thursday, May 31, 2018:
Dow Jones Industrial Average: 24,415.84, -251.94 (-1.02%)
NASDAQ: 7,442.12, -20.34 (-0.27%)
S&P 500: 2,705.27, -18.74 (-0.69%)
NYSE Composite: 12,527.14, -98.73 (-0.78%)

Weekend Recap: Wild Wall Street Ride Continues Push Higher

Amid the swirling winds of Washington's political circus, the nation's financial sector continued to take all the body blows, low blows, and talking head shots dished out by the deep state in perfect stride, carrying the averages to new highs on Wednesday following President Trump's speech before a joint assembly of congress.

With one eye on the political process and the other on the Federal Reserve, stocks continued to dance forward into March, with two key dates upcoming: Friday, March 10, when the February non-farm payroll report is released, and, Wednesday, March 15, the conclusion of a two-day FOMC meeting largely expected to result in an increase in the federal funds rate, from 0.50-0.75 to 0.75 to 1.00.

The jobs report will be crucial in terms of setting the agenda for the Fed governors. If expectations are met and job growth continues to be robust, the Fed will almost certainly announce a rate hike. Falling short of expectations could lead to another month of inaction on interest rates.

In any case, stocks were pumped after the presidential address in which Mr. Trump reiterated promises to build a wall on the border between Mexico and the United States, repeal and replace Obamacare, and set forth an overall economic agenda that will include budget cuts to various agencies, a trillion dollar infrastructure plan and a rejiggering of the tax code.

Should the President succeed even marginally on his lofty economic goals, stock pickers may well find themselves in a condition to ignore any moves by the Fed, freeing speculators from the tired monologue that has led the market for the past eight years running and continue the now third-longest expansion in stock market history.

Shrugging off such ancient notions as fundamental valuations and price-earnings ratios, investors have taken the stock markets literally to uncharted territories. The US dollar remains the currency of choice in most of the world and with that oil and most commodity prices have slumped and/or stabilized. Bonds continue to vacillate, though short term rates are beginning to show signs of stress, especially in consideration of upcoming budget and debt ceiling debates. Also on the minds of many in the investing community are elections in the Netherlands (in two weeks) and France (April 23) where populist candidates in the Donald Trump style are engaged in hotly contested races.

The populist surge sweeping the globe is unlikely to be quelled soon, either by technocrats in the European Union or entrenched politicians across a wide swath of nations, from Malaysia to Japan to Italy and Germany. The middle class in developed nations, having been squeezed financially by globalization, is in nearly full revolt. All the while, giant corporations appear confident that they will weather the ongoing stormy crises.

At the Close, 3.3.17:
Dow: 21,005.71, +2.74 (0.01%)
NASDAQ: 5,870.75, +9.53 (0.16%)
S&P 500: 2,383.12, +1.20 (0.05%)
NYSE Composite: 11,598.37, +22.46 (0.19%)

Since the election in early November, the NYSE Comp. and S&P 500 have closed higher 12 of 17 weeks, the Dow and NASDAQ, 13 of 17.

For the week ending 3.3.17:
Dow: +183.95 (0.88%)
NASDAQ: +25.45 (0.44%)
S&P 500: +15.78 (0.67%)
NYSE Composite: +57.08 (0.49%)

Stocks Drop, Rally In Split Session; Dow Down Three Straight; Apple Beats; Gold, Silver Rally

Beginning just after 2:00 pm ET, a furious rally brought US stock indices back from the depths of despair, finishing up Tuesday with a split decision, the S&P and Dow down, the NASDAQ and NYSE Comp. positive.

In close focus was the Dow Industrial Average, which was lower by as much as 186 points, but gathered back nearly half of that in the final two hours of the session. Leading the way lower were financial stocks, Goldman Sachs (GS) and JP Morgan Chase (JPM), the same companies that boosted the averages during the "Trump Rally" following November's election.

Now, it appears the euphoria over the presidency of Donald J. Trump is waning and enthusiasm for making America great again is falling prey to the harsh realities of economics, politics, and a divided country. Also weighing on stocks ae Trump's own bold initiatives, Twitter tweets and statements which appear to indicate that the 45th president is about to engage in an all-out, no-holds-barred currency and trade war with America's largest trading partners, in particular, China, Mexico and the European Union.

It just so happens that what President Trump is doing is exactly what he promised all during his campaign for the high office. Trump is truly an agent for change, but his changes - and the execution of them - are almost certainly not going to be smooth or predictable.

Today's targets of Trump ire included pharmaceutical companies, Germany and congress. Among other things, Trump told pharma execs to lower prices and move their operations back to the US.

Early in the day, President Trump's top trade advisor, Peter Navarro, said Germany was benefiting from a "grossly undervalued" euro, that gave Germany an unfair edge over US and fellow EU trading partners.

As for congress, Trump continues to hoot over the Democrats' stalling tactics on his cabinet nominees. In a procedural move, Democrat senators walked out on committee votes for nominations for Health and Human Services nominee, Tom Price, and Treasury pick, Steve Mnuchin. Democrats also delayed a vote (reportedly only until tomorrow) on Attorney General choice, Jeff Sessions, a position which has been the focus of vigorous debate.

All of this is providing cover for sellers and considerable confusion in global markets, sending the Dow into the red for a third straight day. Since the top tick of 20,125.58 on January 26 (last Thursday), the Dow has dipped 340 points intraday, or about 1.6%.

While it's still not enough to call a trend, it is worrying to some, especially since anybody with even marginal knowledge of stock valuations has to understand just how overvalued equities are, especially under the current changing environment.

Amid the carnage in stocks, gold and silver rallied sharply as the dollar slipped. Bond yields fell, with the 10-year note holding at 2.45%.

It's been often said that Wall Street hates uncertainty, and there's more than enough of that fueling the current dips and dives.

Just in after the close are Apple's (AAPL) earnings for its fiscal 2017 first quarter. Apple had $78.4 billion in gross revenue on expectations of $77.4 billion, and reported earnings of $3.36 per share on expectations of $3.21. IPhone sales were well beyond expectations. Shares of Apple were up more than three percent in after-hours trading, which should provide at least a temporary boost to stock prices tomorrow.

At the Close, Tuesday, 1.31.17:
Dow: 19,864.09, -107.04 (-0.54%)
NASDAQ: 5,614.79, +1.07 (0.02%)
S&P 500: 2,278.87, -2.03 (-0.09%)
NYSE Composite: 11,222.97, +17.73 (0.16%)