US stocks enjoyed a last-minute rally after President Donald Trump began the process of deregulation but it was not enough to keep record high tickers for an eleventh session.
Trump signed an executive order directing federal agencies to set up task forces to review what regulations can be repealed.
The order, Trump said, will make sure that each federal agency has a “dedicated team of people” to research which regulations are “unnecessary”, “burdensome” or “harmful to the creation of jobs and business.”
Ironically, he’s handed the task of rolling back bureaucracy, to bureaucrats. But for now, investors saw it as a step in the right regulation of cutting red tape.
The market has been mixed most of the session, but the Dow Jones Industrial Average, which for ten successive session racked up record high after record high, was unable to rise enough to pin another.
The Dow, which had been in negative territory for the whole session, finally began to rally and ended up 0.05% at 20,821.76 – the intraday high. But it didn’t surpass Thursday’s record high of 20,840.70. instead, it had to settle for a fresh closing high level.
The other two major tickers, the S&P 500 and Nasdaq Composite, had already given up the ghost of record highs midweek. And for most of the session they too spent the session below the previous closing level while 10-year US Treasuries marked the lowest yields in two weeks as investors sought safer haven in fixed income.
The S&P 500, the market bellwether, ended up 0.2% higher at 2367.34, the intraday high. But it too was off the record of 2,368.26 – just.
The Nasdaq finished up 0.2% at 5845.31. That too was the intraday high, but it too was shy of the record high of 5,866.96.
The S&P 500 top gainer was the Apparel & Shoes retailer Footlocker Inc (NYSE:FL) up 9.4% at $75.01 after reporting a positive earnings surprise for the third successive quarter, as it reported its full year results.
Despite shaky news from JC Penney (NYSE:JCP) and the second biggest faller in the S&P 400 with a 5.8% decline to $6.46, the retail sector wasn’t in a bad place today. Digital news organisation Axios reported that a top advisor to Trump, Gary Cohn, has killed off the possibility that a border-adjustment tax — which would levy a tax on imports, from which exports would be exempted — be part of a proposed tax overhaul. The retail sector is strongly against the border tax.
Unsurprisingly, many of the top risers on the S&P 500 were retailers. They included earnings-buoyant Nordstrom (NYSE:JWN), up 5.7% at $46.46, Kohl’s (NYSE:KSS) up 5.1% at $42.99, L Brands (NYSE:LB) up 4.2% at $50.99, Gap (NYSE:GPS) up 3.1% at $24.70, Best Buy (NYSE:BBY) up 2.8% at $45.56 and Dollar Tree (NYSE:DLTR) up 2.4% at $79.41.
Early trading
US shares opened weaker on Friday as a risk-off trade played out with safer haven US Treasury yields at their lowest levels in two weeks with investors anxious about President Donald Trump’s likely rhetoric to a right-wing audience today.
Defensive sectors like utilities were also looking up. US utilities shares were on track for their best week since before the shock election of Donald Trump as the reflation trade loses some of its lustre.
The S&P 500 utilities sector was poised to log a 3.3% rally this week, the sharpest rise since late September.
The S&P 500 never managed to rise on Friday and was last down 0.3% at 2357. The Dow Jones Industrial Average may have clocked ten record gains in a row in the past two weeks, but it cannot lock those gains. It was down 0.3% at 20,757. Meanwhile, the Nasdaq Composite was down 0.3% at 5815.
The S&P’s biggest loser was Hewlett Packard Enterprise (NYSE:HPE), down 8% at $22.69.
Trump was speaking at the Conservative Political Action Conference in Maryland on Friday, adding to market nerves over what he might say to the group of right-wing activists.
US stocks tracked weaker European bourses and poor earnings figures in early trading.
Even housing, the bulwark of the reflation ambitions of Trump, took a knock. Sales of newly built homes in the US rebounded by the most since July 2016 last month but were shy of economists’ forecasts.
New home sales climbed 3.7% in January from the previous month to an annualised pace of 555,000 units, the Census Bureau said on Friday. That was shy of economists’ expectations of a 6.4% gain, to a pace of 571,000 units.
Other data disappointed too.
After starting the year at its highest level since 2004, US consumer sentiment ticked down in February, while still managing to post a marked improvement over the same month a year ago and extending its best three-month streak in more than a decade in the wake of Donald Trump’s presidential victory.
The University of Michigan’s consumer sentiment gauge clocked in at 96.3 for February, just beating the 96 reading that analysts surveyed by Bloomberg had expected.
The S&P Midcap 400 was down 0.3% at 1730 and led by J.C. Penney Company Inc (NYSE:JCP), down 8.2% at $6.30. Volumes were brisk to sell, with nearly 30,000 trades in early trading when the average daily volumes are 16,000.
The S&P Smallcap 600 lost 0.3% to 850 and led by Career Education (NASDAQ:CECO) down 13% to $8.12 after reporting a $0.44 loss per share for the quarter, missing the analyst consensus estimate of a loss of only $0.06.
Pre-Open
US stocks are expected to extend on Friday what where they did the previous session. A mixed performance by the trio of major tickers.
Only this time it is the S&P 500 which is expected to open higher by 0.2% while both the record-reaping Dow Jones Industrial Average and the weaker Nasdaq Composite are seen opening up to 0.5% lower.
However, futures trading wasn’t very accurate on Thursday, with the pit seeing large percentage gains at the outset and fresh records for the trio of tickers. Then the open saw them sink and only the Dow recovered to mark a fresh record high.
The Dow’s run has certainly been impressive with 10 successive sessions of gains worth two whole trading weeks of gains. That’s the longest run since 1987.
But market historians might also remind us that later in October 1987 the stock market also suffered its worst one-day drop ever.
Hopes for tax cuts and a rollback on regulations from President Donald Trump and the Republican-led Congress have helped to fuel investors’ optimism with the Nasdaq and S&P 500 joining in the record run until they chickened out earlier in the week.
Although they didn’t feature highly in the wobbly overall stockmarket on Thursday, retailers had a bad run and there is more bad news for retailers on Friday.
Shares in companies like Wal-Mart (NYSE:WMT), Target (NYSE:TGT), Nike (NYSE:NKE) and Dollar Tree (NASDAQ:DLTR) took a swift drop late on Thursday after Trump told Reuters that a border adjustment tax could result in more US jobs.
Retailers have been lobbying against a proposal by Congressional Republicans that would increase the tax bite on any company that imports goods into the U.S.
Wal-Mart shares were down 0.3% at $71.10 pre-market, while Nike shares were down 0.4% at $57.18.
US department store JC Penney (NYSE:JCP) on Friday announced plans to shut between 130-140 stores in the coming months as it focuses on better competing with online rivals amid a downturn in department store sales and said it recorded its first annual profit since 2010.
The company that sold its headquarters in Plano, Texas and is leasing it back in an effort to lower costs, said the stores that are being closed amount to less than 5% of its annual sales and were underperforming.
JC Penney shares were down 3.4% at $6.63 pre-market.
In data, the Michigan final consumer sentiment index for February is released at 1000 ET (1500 GMT) and is forecast to ease to 96 from 98.5 in Janaury. A preliminary reading for February showed sentiment dropped, pulled down by Democratic supporters who are worried about the future.
Generally, data hasn’t been overly optimistic this week. Outside of the consumption arena, weaker Kansas Fed and Chicago Manufacturing data mid-week ruffled markets that are expecting gains in light of Trump’s reflationary plans, which might now become more urgent.
Shares in Nordstrom (NYSE:JWN) advanced in extended trading on Thursday following buoyant quarterly earnings after the bell. Nordstrom shares were up 2.1% at $44.85 pre-market.
Meanwhile, shares in Hewlett Packard Enterprise (NYSE:HPE) plunged after its after-hours quarterly results on Thursday. The shares were seeing no mercy on Friday, down 9% at $22.45 pre-market.
Shares in Royal Bank of Scotland (NYSE:RBS) are set to drop in New York after it the part state-owned bank reported a ninth consecutive year of losses. The bank has posted total losses of $73.5bn since receiving a government bailout in 2008.
RBS ADRs were down 4.5% to $5.98 pre-market.