U.S. equities are drifted around the unchanged line on Thursday, recovering from early weakness of a type not seen in weeks. While the Dow Jones Industrial Average inched to another new record, large-caps overall broke a seven-day winning streak amid a focus on sentiment and valuations overhangs.
The big news of the way was a combative (and very long) freewheeling press conference from President Trump in which he pushed back hard against recent negative coverage in the media surrounding the resignation of National Security Adviser Mike Flynn, charges of “chaos” in the White House, and the ongoing beat of the “Russian interference” drum by “fake news” organizations.
This raised some eyebrows and once again turned the barometer of policies risk towards negative (vs. the positive feelings surrounding Trump’s tax reform promises, for instance).
In the end, the Dow gained a fraction, the S&P 500 lost 0.1%, the Nasdaq Composite lost 0.1%, and the Russell 2000 lost 0.4%. Treasury bonds were stronger, the dollar came under pressure, gold gained 0.7% and oil finished with a 0.5% gain.
Defensive, yield-sensitive utilities and telecoms led the way higher with gains of 0.9% and 0.5% respectively to partially recover from recent weakness. Energy was the big laggard, down 1.4%.
Kate Spade & Co (NYSE:KATE) gained 14.7% after reporting better-than-expected results and confirming it is reviewing strategic alternatives to boost shareholder value. Bloomberg reported last month that competitors including Coach Inc (NYSE:COH) have expressed interest. Barrick Gold Corporation (NYSE:ABX) gained 6.1% on a earning beat driven by strong revenue — helping to lift the Vectors Junior Gold Miners (NYSEARA:GDXJ) recommended to Edge subscribers to a 13% gain.
On the downside, Avis Budget Group (NASDAQ:CAR) fell 12.1% on weak results and a decline in U.S. pricing power amid chatter of increased competitive pressures and lackluster volumes. TripAdvisor Inc (NASDAQ:TRIP) fell 11% on a quarterly earnings miss. And MGM Resorts (NYSE:MGM) fell 9.3% on an earnings miss on a decline in profitability. A trifecta of bad news from the tourism space.
There was some bad news in the consumer goods space as well. Dean Foods (NYSE:DF) fell 8% on earnings. GNC (NYSE:GNC) fell 7.2% on a big earnings per share miss on weaker domestic margins and a 12% drop in U.S. comp-store sales despite a brand relaunch effort. And Kraft Heinz (NASDAQ:KHC) fell 4.2% on an earnings miss.
On the economic front, there was some more hawkish Federal Reserve chatter firming up the expectation that multiple rate hikes are on the table this year. Fed vice-chair Stanley Fischer said two or three rate hikes were in line with his expectations.
For now, I continue to recommend a cautious approach with a focus precious metals, bonds, and select long positions in big-caps that have lagged the market’s narrow rise to new records. Examples include Johnson & Johnson (NYSE:JNJ), which is breaking out of a multi-month holding pattern to push the March $115 JNJ calls recommended to Edge Pro subscribers on Tuesday to a gain of 73%.