Equities traded in tight ranges on the main exchanges Thursday, with the bears winning the day, albeit marginally.
The small boost from retail stocks earlier in the week failed to extend to the general market. Cisco Sytems (CSCO) and Wal-Mart (WMT) each weighed heavily on the market despite both companies meeting analyst exceptions for first quarter earnings.
Current market mood is jaded, as companies that have reported acceptable earnings for the first quarter have been routinely punished by the market, with immediate selloffs the norm on receipt of news, whether good or bad. That kind of action is a pretty good indicator of distribution, an otherwise gentler term for profit-taking.
Heading into the tail end of the week, the Dow is looking considerably weaker than at the start, with Monday, May 14, the culmination of an eight-day winning streak, possibly marking the high-point of the month.
Friday is an options expiration day, so, some volatility is to be expected, though it's equally likely that many punters have already closed out their positions, which could leave the market with little upside. As odds go, the day looks very much like a toss-up, though a move of more than 150 points either way on the Dow is unlikely unless the herd gets a signal to scramble.
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
At the Close, Thursday, May 17, 2018:
Dow Jones Industrial Average: 24,713.98, -54.95 (-0.22%)
NASDAQ: 7,382.47, -15.82 (-0.21%)
S&P 500: 2,720.13, -2.33 (-0.09%)
NYSE Composite: 12,747.83, +4.03 (+0.03%)
Wednesday, it was Macy's (M) reporting solid sales growth in the first quarter, fueling some interest in retail stocks overall.
Thursday morning, Wal-Mart is reporting 33% growth in online sales for the first quarter, proving that Americans will go where service and price are balanced, as the nation's largest retailer continues to roll out its innovative "ship-to-store" option and discounted shipping (free two-day delivery).
Amazon, the king of online retailing, may have succeeded in killing off and/or absorbing some smaller chain store retailers and accelerating the demise of dinosaurs like Sears, but they're certainly not going to mash down the biggest companies, such as Macy's, JC Penney, and Wal-Mart. While Seattle-based Amazon can build as many warehouses and fulfillment centers to facilitate faster, more efficient delivery, it is still hampered by its lack of bona fide retail locations, though its recent acquisition of Whole Foods will change that to varying degrees in different sectors and geographical locations.
Wal-Mart, which has a significant footprint in the retail food space, probably isn't worried about the emergence of Whole Foods poaching its customers, because Whole Foods is largely a near-luxury brand, selling organics and other higher-priced goods, while Wal-Mart customers are accustomed to low-priced, competitive products.
The recent resurgence of retail in the face of the Amazon effect should buoy some stocks and create an environment that will only become increasingly competitive, both online and in the real, brick-and-mortar world. As retailing evolves into 21st-century standards, don't expect first-mover Amazon to extend its gains, though its presence will certainly be dominant. Innovation by those playin catch-up with the newer technology should prove to level the playing field somewhat in coming years.
Macy's earnings beat managed to squeeze some upside out of stocks on Wednesday. Thursday's rise or fall will have much to do with Was-Mart's success story, though it may not provide enough of a catalyst to pull the entire market higher.
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
At the Close, Wednesday, May 16, 2018:
Dow Jones Industrial Average: 24,768.93, +62.52 (+0.25%)
NASDAQ: 7,398.30, +46.67 (+0.63%)
S&P 500: 2,722.46, +11.01 (+0.41%)
NYSE Composite: 12,743.80, +39.17 (+0.31%)
Naming retailers as culprits for ending the recent uptick in stocks on Tuesday probably doesn't quite hit the mark, even though stock futures continued to slide after April retail sales data was produced at 8:30 am EDT, prior to the market opening.
Overall, retail sales improved by 0.3% over the month, matching lowered expectations after a surprise gain of 0.8% in March. Whether traders were somewhat disappointed in the number is a matter of some speculation, better left with a question mark than a definitive answer.
What did likely spook the markets was the abrupt rise in bond yields, as the 10-year-note zapped higher to yield 3.07% during the day, a number not seen since 2011. The 2-year yield saw 2.60%, its highest level since 2008.
These are concerning numbers to stock hawkers because they are considered fairly risk free methods of making money, whereas stocks - even those offering dividends - imply risk, as stock prices rise and fall.
With the February's recent turn in markets still fresh in the mind, there are more than a few traders taking money off the equity table and moving it toward the relative safety of bonds. Besides, after eight days of gains, the market was pretty well priced out, so profit-taking commenced. The herd being what it is, the selling turned into a small stampede.
Another concern is the continued high price of crude oil. WTI crude held steady at 71.17 in New York, though pockets of $3.00+ per gallon regular gas began to appear across the filling stations of America. The national average stands at $2.87/gallon, which is beginning to squeeze middle class budgets, especially those with long commutes and larger, less-fuel-economiic vehicles.
Unless bond yields and the price of gas come down quickly, today's 197-point decline could turn worse in coming days and weeks.
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
At the Close, Tuesday, May 15, 2018:
Dow Jones Industrial Average: 24,706.41, -193.00 (-0.78%)
NASDAQ: 7,351.63, -59.69 (-0.81%)
S&P 500: 2,711.45, -18.68 (-0.68%)
NYSE Composite: 12,704.56, -67.47 (-0.53%)
Stocks started the week on a strong note, only to see the rally fade as the session wore on, leaving the indices with marginal gains, led by the Dow Industrials with a 0.27% rise, the eighth straight trading day in which the Dow has recorded a positive close.
Higher by 163 points in the 11:00 am hour, Dow stocks gave back nearly 100 points, or roughly two-fifths of their value by the end of the day.
With most major companies having already reported first quarter earnings, this may turn into a rather dull week, though Tuesday's trifecta of economic data releases - NY Fed Manufacturing, Retail Sales, and Durable Goods - may provide suitable trading fodder.
On Wednesday, Macy's (M) reports prior to the market open, while Cisco Systems (CSCO) reports after the close.
Thursday may be the most impactful session, as retailers Wal-Mart (WMT), Nordstrom (JWN), and JC Penney (JCP) each report before the opening bell.
Thus far, nearly at the halfway point of the month, "sell in May" has not been the preferred trading regimen. Rather, a family strong counter-rally has been tearing along, leaving the Dow at its best level in nearly two months.
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
At the Close, Monday, May 14, 2018:
Dow Jones Industrial Average: 24,899.41, +68.24 (+0.27%)
NASDAQ: 7,411.32, +8.43 (+0.11%)
S&P 500: 2,730.13, +2.41 (+0.09%)
NYSE Composite: 12,772.04, +10.22 (+0.08%)
Finishing out the week with a lackluster session that had the Dw up nearly another 100 points, the rally that began on May 26 - and which Money Daily then predicted would run 1000 points - is, as of Friday, good for a cool 747 points, rising, with a few bumps and grinds along the way, from 24,083.83 (April 25 close), to the current closing price of 24,831.17.
Unlike the NASDAQ (which finished lower on Friday), the S&P (which has seen two down days in the past seven), and the NYSE Composite (up six straight days) the Dow has risen each of the past seven sessions, although two of those sessions - the first and the fourth, which respectively saw gains of just five, and two points - have not been considered very inspirational nor insightful.
Still, stocks continue to ramp higher. They'll keep doing this until the herd of traders, lemming-like, will turn away for a few days or decide that they'd rather hold onto art or comic books or Beanie Babies or baseball cards, vintage cars, or oil futures while their favored pieces of dingy, junky corporate paper wither away over a longer period of time and get revalued at more appropriate prices.
That's the way Wall Street has always worked, and, despite all the howling from pundits, idiots and idiosyncratic voices one may value or disavow, it is the way it will always work.
Until it changes, the world is stuck with Wall Street and its various iterations in London, Berlin, Tokyo, Hong Kong, Shanghai and the various bourses of the civilized world, trading in debt and equity instruments of which the average investor knows little, expects much, and is happy to pump money into over vast swatches of time.
This kind of activity, viewed from an outside perspective, might seem odd. People make money from their various endeavors, only to pay bills, build up debt (mortgages, college funds, credit cards), and give the rest to some known or unknown entity to purchase partial shares of megalithic international corporations, giving said corporations vast amounts of money and power to invest, divest, spend, grow, or waste.
How much money is eventually a waste by corporations never enters the equation, though it's likely to be an enormous sum of money, which is probably why it's never mentioned.
For certain, some corporations do some good, but others are merely there for the taking, the tops of them skimmed by the ubermeisters of the investing world, the whales, the one-percenters, the government and probably some reckless speculators. The rest is left to the proletariat, the pensioners, the poor people.
A good question to ask a professional financial advisor is whether it would be wise to sell off a large portion of one's money in stocks and pay off all of one's debt, including the voracious eater of happiness, the 30-year mortgage. The stock answer is "no," followed by "no," and "oh, no."
Paying off one's mortgage would put banks out of business (it wouldn't really), and without banks, well, we wouldn't have, um, well... you see where this is going.
A long, long time ago, men and women owned land, raised their own crops, husbanded their own animals, taught their own children and bore whatever good or evil the earth, sun, and nature would bestow upon them. That was before the rise of the predator class of bankers, insurers, financiers, and governments. Now we outsource everything, starting with our own existence, the food we eat, to our children, which we send to schools where they are taught shoddily the ways of good citizenship and nothing about good survival and the difference between existence and prolonged suicide.
Your 401k or pension plan may give you comfort, but only indirectly. It's a promise to pay, over time. And promises are often broken. Just look at the divorce rate in developed countries or listen to a politician over a period longer than two years and you might detect that promises and words do not necessitate a brighter future.
Being bound to the whims and fantasies of corporate CEOs, government officials and generally, people whose wealth and power far exceeds your own may be some consolation that you have done well, but, in the end, all you really have is yourself and the land on which you stand, and some of you don't even own that.
Some things to think about, brought to you by music from the 60s.
Bear in mind: 26,616.71.
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
At the Close, Friday, May 11, 2018:
Dow Jones Industrial Average: 24,831.17, +91.64 (+0.37%)
NASDAQ: 7,402.88, -2.0913 (-0.03%)
S&P 500: 2,727.72, +4.65 (+0.17%)
NYSE Composite: 12,761.82, +30.18 (+0.24%)
For the Week:
Dow: +568.66 (+2.34%)
NASDAQ: +193.27 (+2.68%)
S&P 500: +64.30 (+2.41%)
NYSE Composite: +268.47 (+2.15%)
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