U.S. equities traded near the unchanged line on Thursday, off of their best levels on reports that President Trump is possibly considering military options against Syria after an alleged chemical weapons attack against civilians in Idlib earlier in the week.
In the end, the Dow Jones Industrial Average gained 0.1%, the S&P 500 added 0.2%, the Nasdaq Composite wafted up 0.3% and the Russell 2000 finished the day higher by 0.9%. Elsewhere: Treasury bonds were largely unchanged, the dollar slightly higher, gold gained 0.4% and oil added 1.1% to close higher in seven of its past eight sessions.
Energy stocks led the way with a 0.8% gain, which boosted the April $83 Exxon Mobil Corporation (NYSE:XOM) call options recommended to Edge Pro subscribers. Telecom and utility stocks were the laggards, down 1.6% and 0.2%, respectively.
Pharmacy chain Fred’s, Inc. (NASDAQ:FRED) gained 13.9% thanks to a smaller-than-expected quarterly loss on strong margins. What’s more, management remains committed to the acquisition of up to 1,200 Rite Aid Corporation (NYSE:RAD) stores. Bed Bath & Beyond (NASDAQ:BBBY) gained 3.4% on better-than-expected comp-store sales, revenues and an earnings beat. Costco Wholesale Corporation (NASDAQ:COST) gained 1.8% on accelerating March comp-store sales.
On the downside, Advanced Micro Devices, Inc. (NASDAQ:AMD) lost 6.3% after the stock was initiated with a “sell” rating by Goldman Sachs analysts, noting a 22% potential downside on valuation concerns. Twitter Inc (NYSE:TWTR) lost 1% after co-founder Evan Williams said he was selling a share of his stake.
Stocks continue to face a number of headwinds here including an increasingly hawkish Federal Reserve, the situation in Washington and the looming start of the first-quarter earnings reporting season.
Yesterday’s Fed meeting minutes, which resulted in erasure of a 200-point intraday gain in the Dow, talked up the rising chances of action before the end of the year to normalize the Fed’s swollen $4.5 trillion balance sheet — beginning the process of reversing multiple bond buying stimulus programs. Adding to the nervousness was the Fed’s statement that stock prices were “quite high” in terms of valuation.
In Washington, efforts on tax cuts and healthcare reform remain gridlocked as the Senate moved forward with Trump’s Supreme Court nominee — unleashing the so-called “nuclear option” to break a filibuster effort by the Democrats. That reduces the chances of bipartisan cooperation from unlikely to practically nil on any legislation going forward.
Trump is hosting Chinese President Xi Jinping today in Florida, with much to discuss concerning foreign policy, trade and North Korea. Turning back to Syria, Secretary of State Tillerson said “steps are underway” to remove Syrian leader Assad from power.
If all that wasn’t enough, the Q1 earnings season is set to start in about 10 days — meaning we are in a buyback blackout period, removing a major source of buying support from the market for the next few weeks.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. A two-week and four-week free trial offer has been extended to Investorplace readers. Redeem by clicking the links above.