Stocks Waver Amid Fed Chief Powell Talk As Apple Stock Rides 4 Realities

U.S. stock indexes wavered between positive and negative action Thursday after Federal Reserve chief Jerome Powell addressed the Senate.

The Nasdaq was nearly flat after being down 0.8% early. The large cap S&P 500 lost 0.1%, while the small cap Russell 2000 gained 0.15%. The Dow Jones industrial average retreated 0.1%.

Volume in the stock market today rose on both major exchanges vs. the same time in the previous session.

Federal Reserve chief Jerome Powell faced the Senate Banking Committee at 10 a.m. ET after addressing the House on Tuesday. The stock market lost more than 1% Tuesday in apparent reaction to Powell’s suggestion that there might be four rate hikes this year. In December, the Fed hinted at three rate increases.

The question leading into Powell’s testimony Thursday was whether Powell would stand firm on his Tuesday comments or try to soften the message.

After his prepared remarks, Powell told the Senate that, “Nothing … suggests to me that wage inflation is at a point of acceleration.” The stock market appeared to initially react positively to that remark but eventually turned wobbly.

Among IBD’s 197 industry groups, steel makers and specialty alloy stocks led the pack. Steel stocks working on bases and closing in on potential buy points include: Nucor (NUE), which rose 2% in strong volume; Tenaris (TS), which popped 2% in huge volume; and Carpenter Technology (CRS), which added almost 1% in moderately higher volume.

Apple’s Four Drivers

Meanwhile, Apple (AAPL) managed a small gain in the morning even as the markets weakened. But the gain didn’t increase as the market staged its positive reversal. Apple is working on its third weekly gain in a row in a nearly six-week long consolidation.

Apple has at least four things going for it: a lower corporate tax rate that went into effect Jan. 1; cash and cash equivalents that reached $268.9 billion, as of year-end 2017; a lead in wearables; and a chart that reset Apple’s base count during the recent 12% correction in the S&P 500.

As a stock rises, it pauses to consolidate. Breakouts from the first two consolidations are more likely to work than those from later-stage patterns. When a pattern undercuts the previous pattern’s low, the base count is rest at one, which is what Apple did.

Apple’s pile of cash leaves it well-positioned to raise its dividend. Apple usually announces dividend increases in late April.

Financial Data

First-time jobless claims rolled in at 210,000, which was 7% fewer than the lowest estimate in the range and almost 9% below the Street’s consensus view.

Personal income for January rose 0.4%, edging above the consensus estimate of 0.3%. Consumer spending inched up 0.2%, in line with expectations.

The PMI Manufacturing Index for February was pegged at 55.3, below the lowest estimate in the range (55.4). But the Institute for Supply Management’s manufacturing gauge for February came in at 60.8, above both the consensus view for 58.6 and the highest estimate in the range, 59.5.

Construction spending for January missed the mark. The consensus estimate was 0.3% but the reading was flat.

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