Comey's Hotly-Anticipated Testimony Sets Wall Street on Edge but Stocks Finish With Small Gains - TheStreet

It was the moment we had been waiting all week for: former FBI Director James Comey gave public testimony to the Senate on President Donald Trump and possible connections with Russia. Wall Street was riveted.

But Comey's damning retelling of events did not push markets in any major direction. Stocks did manage, however, to close out the session with small gains.

The S&P 500 was up 0.03%, the Dow Jones Industrial Average rose 0.04%, and the Nasdaq rose 0.39%. The Nasdaq finished at a new record high of 6,321.76.

In comments to the Senate, Comey said, "I take the president at his word I was fired because of the Russia investigation." When asked, Comey said he had "no doubt" that Russian government officials had attempted to interfere in the 2016 election. He also called Trump a liar and said the version of events the White House had pushed in the wake of his surprise firing were an effort to defame him.

"The administration then chose to defame me and more importantly the FBI, by saying the organization was poorly led," Comey said, referring to the White House's story that the FBI had been unhappy with his role as director. "Those were lies, plain and simple."

However, Comey refrained from calling President Donald Trump's request to drop the investigation into former National Security Adviser Michael Flynn an attempt to obstruct justice -- he said it was not "for me to say" what Trump's intent was, though he did find the request "very disturbing."

Trump's outside counsel on Thursday responded to Comey's testimony by criticizing his leak of internal memos. Marc Kasowitz said in a statement that Comey had "admitted" to sharing his memo with a friend who then leaked to the press. Kasowitz also said that Trump did not pressure Comey.

Comey detailed his numerous meetings with Trump since January in his pre-released opening statement on Wednesday afternoon before the Senate Select Committee on Intelligence. Comey said he had not told Trump that he would cease investigations into Flynn despite Trump's request. Comey also said that Trump had said, "I need loyalty. I expect loyalty." Comey based his testimony on his recollections and a series of memos composed after several meetings.

Trump fired Comey in May while the FBI was investigating the Trump transition team's ties to Russia. News reports indicated that Trump had asked Comey for his loyalty and requested he stop investigating Flynn.

"The Comey testimony provides ammunition for both parties, but the so-called 'smoking gun' is absent," said Quincy Krosby, chief market strategist at Prudential Financial. "For the next 12-18 months investors will factor in headline leaks from political insiders and try to interpret any signals from the Mueller investigation. However, what investors want above all else, is to have the president's agenda translated into action, viable action."

Financials stocks led markets on Thursday. Bank of America (BAC) , Citigroup (C) , JPMorgan (JPM) , and Wells Fargo (WFC) each moved higher. The Financial Select Sector SPDR ETF (XLF) rose 1.2%.

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Also on Thursday, U.K. citizens headed to the polls as the country continued to mourn terrorist attacks in Manchester and London in the past few weeks. Prime Minister Theresa May holds the lead in the polls over Labor's Jeremy Corbyn. In the wake of the London attack over the weekend, May has hardened her position against extremism, arguing that she would alter human rights laws if needed to protect the British people. The election results will likely not be fully tabulated until Friday morning in London.

"There are a few certainties in this election, but one thing we almost know for sure is that turbulence in financial markets is likely to intensify in the short-term as Britain readjusts," Tom Elliott, deVere Group's international investment strategist, wrote in a note.

The European Central Bank opted to leave rates unchanged on Thursday, as expected. The central bank said that it expects interest rates to "remain at present levels for an extended period of time, and well past the horizon" of its asset purchase program. That language was altered to remove a previous reference to rates remaining at present "or lower levels for an extended period of time."

Eurozone growth projections were also increased. The ECB anticipates GDP growth of 1.9% in 2017, up 10 basis points from forecasts set in March. For 2018 and 2019, eurozone GDP is expected to increase by 1.8% and 1.7%, respectively. In a press conference Thursday, ECB President Mario Draghi said that the central bank had seen an uptick in economic activity since last meeting in April, though monetary accommodation was still required.

"Inflation is persistently low and this will mean that the ECB will only remove accommodation at a glacial pace," Aberdeen Asset Management senior investment manager Patrick O'Donnell. "For the time being, the doves on the governing council are clearly in control. We probably won't see anything significant from the ECB until September, by which time they'll know more about this conundrum of low inflation."

Jobless claims in the U.S. fell in the past week, another sign of a tightening labor market. The number of new claims for unemployment benefits declined by 10,000 to 245,000, according to the Labor Department. The less-volatile, four-week average increased 2,250 to 242,000.

Crude oil prices edged lower on Thursday after its worst day in three months suffered a day earlier. Commodities had plummeted after the Energy Information Administration reported a surprise increase in domestic stockpiles.

West Texas Intermediate crude was 0.2% lower at $45.64 a barrel.

You can't expect a real panic to liquidation to begin until oil reaches $43 a barrel, Cramer argued on Real Money. Get his insights with a free trial subscription to Real Money.

Valeant Pharmaceuticals (VRX) rose 8% on Thursday after agreeing to sell iNova Pharmaceuticals for $930 million in an all-cash deal. iNova will be purchased by a company jointly owned by funds managed by private-equity firms Pacific Equity Partners and the Carlyle Group. The deal is expected to close in the second half of the year.

J.M. Smucker (SJM) fell 1.9% after topping earnings and sales estimates over its recent quarter. The owner of food brands Jif and Pillsbury earned an adjusted $1.80 a share, 8 cents higher than anticipated. Sales declined 1% to $1.78 billion, though came in higher than analysts' target of $1.77 billion.

Alibaba (BABA) shares climbed 13% after China's biggest e-commerce company forecast another massive surge in full year revenue. Alibaba Chief Financial Officer Maggie Wu said annual sales will rise between 45% and 49% in the 2018 fiscal year, a figure that topped analysts' forecasts and implies revenue of up to $34.3 billion, well ahead of the $31.42 billion expected, according to a Bloomberg survey.