Market Movers Flock To Sidelines As Summer Doldrums Set In
Can the gold hits just keep coming? If trading moves off the flat line to higher ground yet today, the most important market benchmarks may be looking at another lap at the record podium.
This morning’s government report that sales at the nation’s largest retailers were little changed in July didn’t mesh well with fairly upbeat Q2 reports from some of the biggest department-store retailers yesterday. (See below.) The Commerce Department report also did little to move the markets, which straddled the flat line in the early going. Will traders hold on going into the weekend?
A 21st Century Best
Like Olympic gold medalists, the three major benchmarks whirled their way into best-ever territory again yesterday, prodded by a confluence of economic factors that appear to be underpinning an economy scraping its way to higher ground. This summer’s series of market wins has come mostly in small increments of moves, many less than 1%. (See chart.) Is 20,000 on the Dow Jones Industrials Average (DJIA) in the offing? What about 2,200 for the S&P 500 (SPX)?
“We’re continuing to grind higher,” Stephen Carl, principal and head equity trader at Williams Capital Group, told Bloomberg. Thursday’s personal bests for the Dow, SPX and the Nasdaq Composite Index (COMP6) blotted a different watermark: the first time since Dec. 31, 1999, that all major indexes closed at fresh peaks.
That has many analysts pontificating about future rallies. Wells Fargo & Co (NYSE: WFC)’s Chief U.S. Equity Strategist Gina Martin-Adams raised her projection Thursday that the SPX will climb to 2,200 in the next 12 months. Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, is calling for a DJIA “consensus one-year target price” of 20,003.93, according to his calculations. He’s been tracking Wall Street analysts’ company-level predictions of the Dow’s 30 components and that’s his latest analysis.
Remember, though, that Wall Street analysts are not soothsayers. They’re plotting numbers against history with what seems like a gazillion algorithms that may or may not be right. And then there’s the outside-the-market events that they don’t know they don’t know yet. In other words, it could be all a crapshoot.
Until then, the benchmarks are inching up in a sideways pattern that’s reminiscent of, as noted before, the dog days of summer. The SPX added 10.30 points, or 0.5%, to close at 2,185.79 while the DJIA advanced 117.65 points, or 0.6%, to settle at 18,613.31. The COMP6 rose 23.81 points, or 0.5%, to finish at 5,228.40.
What helped pushed all three indexes into that fresh, green grass? Help came from an unexpected, but, by most accounts, a welcome beat on analyst expectations from a handful of retailers. Kohl’s Corporation (NYSE: KSS) and Macy’s Inc (NYSE: M), ahead of the close, turned in better-than-expected Q2 results, and M went a step further to give investors and analysts what they wanted to hear, which was a decision to close 100 stores and sell the real estate that was valued much higher than the sales and profits the stores on them were returning, according to the company. Consumer discretionary stocks logged a gain, helped by that bit of news. After the bell, Nordstrom, Inc. (NYSE: JWN) and Dillard’s, Inc. (NYSE: DDS) kept the good-news parade going. But, as one analyst notes, as encouraging as the retail news is, department stores may still be deep in the woods. (See below.)
Crude oil prices jumped on a Saudi Arabia pledge to stabilize prices—something that’s been promised before. West Texas Intermediate (WTI) settled up 4.3% at $43.49, sharply higher as freeze talks gained traction. That also helped boost the SPX’s energy sector. In the early going, WTI was heading higher again.
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