After The Close - It was a wild week on Wall Street, as the major equity averages went on a bit of a rollercoaster ride over the five-day stretch. The major indexes started the week to the downside, then rallied some in the middle of week before falling sharply over the final two trading sessions. For the better part of the stretch, the bears were flexing their muscles, with the technology and healthcare (particularly biotech) stocks feeling the wrath of the investment community. There was clearly a disdain for the high-growth, more risky stocks in the latest five-day period. The Dow Jones Industrial Average, the tech-heavy NASDAQ, and the broader S&P 500 Index were down 2.4%, 3.1%, and 2.6%, respectively, this week. It also was not a very good week for those long small- and mid-cap issues. Overall, there were not many places in the equity market for skittish investors to hide.

Yesterday’s dour mood on Wall Street carried over into today’s session, with the major market averages under pressure from the get-go. However, the setback were not as pronounced as yesterday, but still nonetheless sizable. At the closing the bell, the Dow, NASDAQ, and S&P 500 Index were off 143, 54, and 17 points, respectively, with the NASDAQ finally dipping below the 4,000 mark. Our sense is that investors remain nervous ahead of what many pundits think will be a disappointing first-quarter earnings season. On point, we received a weaker-than-expected report from Dow-30 component JPMorgan Chase (JPM - Free JPMorgan Stock Report) before the market opened; shares of the bank giant finished lower today. The earnings fears, along with overseas concerns about China’s economy and the geopolitical tensions in Eastern Europe, have investors worried and were likely behind the increased volatility on Wall Street this week. The S&P 500 Volatility Index (or VIX), also known as the fear gauge, finished just above 17 today after being as low as 13.09 last week. As the week unfolded, we saw many investors, particularly the major hedge funds, shunning riskier holdings and beginning to adhere to a “flight to safety” strategy.

From a sector perspective, it was a sea of red ink among the top-10 groups. Once again, the biggest laggards were the technology and biotech stocks. There was also significant selling of the basic materials, industrial, consumer discretionary, and financial issues. The latter sector was hurt by the aforementioned JPMorgan Chase release. Conversely, there was, at times, some mild interest in the defensive-minded utilities and the volatile energy stocks. The latter sector was helped by the continued rise in oil prices, which settled at $103.52 a barrel on the New York Mercantile Exchange. Pushing oil prices higher are concerns that escalating tensions in Ukraine could disrupt some of the worldwide oil supplies.

Meantime, we did get some news on the U.S. economy today, which was welcome. Our stance is that the dearth of data from the business beat, along with minimal earnings releases, may have created a vacuum of trading this week and may be somewhat responsible for the swift and pronounced moves lower. Before the market opened, the Labor Department reported that producer (wholesale) prices rose 0.5% in March. Then at 10:00 A.M. (EDT), the University of Michigan reported that consumer sentiment improved to 82.6 in April, which was up from 80.0 in March and surpassed the consensus expectation of 81.0. It also marked the highest reading since last July. The economic news picks up next week, with data due on retail sales, consumer prices, residential construction activity, and industrial production. Investors should also note that we will get the Federal Reserve’s Beige Book summation of economic conditions next Wednesday. That release is expected to be closely monitored with the lead bank’s monetary policies have been a hot-button topic ever since former Federal Reserve Chairman Ben Bernanke noted last May that the central bank would—and subsequently did—begin tapering its monthly asset purchases.

In addition to the economic news, next week will bring the first onslaught of earnings reports, including the latest quarterly results from nine Dow 30 components. Investors should note that the holiday shortened week, which includes the beginning of Passover on Monday evening, could keep some traders out of the market to some extent. Lighter volume, along with all of the other factors noted above, could add to the volatility on Wall Street and may make for some more pronounced swings in trading. - William G. Ferguson

At the time of this article's writing, the author did not have positions in any of the companies mentioned.


3:05 PM EDT - The bears, who clearly have had their way over the past fortnight, especially when it comes to the tech-laden NASDAQ and the Russell 2000, the leading small-cap benchmark, appeared to be resting on their laurels today and resisting the temptation to again take stocks down sharply. Thus, while the averages were mostly lower throughout the session, the declines had been contained for the most part.

However, over the past hour, or so, as traders get ready for the weekend and others opt to start the festivities a bit early, the market’s underpinnings are weakening anew. True, the losses are nowhere near as severe as they had been yesterday, or this past Monday. Still, the setback is now getting substantial.

On point, as we enter the final hour of this closing session of the week, we find that the Dow Jones Industrial Average is off 145 points, or 0.9%; the NASDAQ, which earlier had been outperforming and had even nudged into the plus column for a few minutes, is now off 60 points, or 1.5%; and the Standard and Poor's 500 Index is in the red to the tune of 18 points. Distressingly for the bulls, the aforementioned small-cap Russell 2000 is now off 20 points, or 1.8%. Losing stocks, meantime, are widening their lead over gaining issues, which is not surprising.

Selectively weaker profits among the first companies to report their quarterly metrics are hurting some. But our sense is that we are just seeing further momentum on the downside, as the selling approaches correction territory on the NASDAQ and the Russell. We aren't there yet, but the trend is not very promising to say the least.   - Harvey S. Katz   

At the time of this article's writing, the author did not have positions in any of the companies mentioned.


12:30 PM EDT - The U.S. stock market got off to a weak start this morning, and has rebounded only partially. Notably, at just past noon in New York, the major averages are still struggling. The Dow Jones Industrial Average is off 74 points; the broader S&P 500 Index is down six points; and the NASDAQ is lower by 15 points. Market breadth is slightly negative, as declining stocks are outnumbering advancers on the NYSE. Most market sectors are trading lower, as well. There is weakness in the financial issues, with losses in the banks. Basic materials stocks are also slipping, as there is weakness in the metals area. Nonetheless, there are some pockets of strength. The energy issues are advancing, as the price of crude oil, now at about $104 a barrel, is slightly higher. The healthcare names are partially rebounding, helped by a recovery in the biotechnology stocks.

Technically, the market has been quite choppy lately. While the Dow and S&P 500 have fared a bit better, there has been considerable weakness on the NASDAQ, with traders rotating out of the riskier growth names. The NASDAQ is now about 7% below the high reached in early March. This index may find some support at around 4,000, as this was an important support area in early February. If a move lower is in store, it may test its 200-day moving, located at 3,930. It should be noted, that the weakness in the NASDAQ has made it difficult for the bulls to take control over the broader market, and suggests that some changes may be unfolding.

Meanwhile, the economic reports were mixed this morning. The Producer Price Index increased 0.5% in March, which was more than had been anticipated. However, inflation is not likely an issue, just yet. Elsewhere, the University of Michigan’s consumer sentiment index came in at 82.6 for April, which showed some improvement.

Meanwhile, investors received a few important earnings releases in the bank area. JPMorgan Chase (JPM - Free JPMorgan Stock Reprt) stock is lower after that financial leader put out disappointing figures. But, Wells Fargo (WFC) stock is up, as that bank put out a healthy report. - Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


Stocks to Watch from The Survey Financials are in the spotlight today, as two of the nation’s largest banks, JPMorgan Chase (JPMFree JPMorgan Chase Stock Report) and Wells Fargo (WFC), have released first-quarter results. Investors were disappointed with JPMorgan’s latest update, as a decline in revenues from securities trading (among other factors) caused profits to miss the mark. JPM shares are moving moderately lower in pre-market trading, in response. Results from Wells Fargo garnered a warmer reception on Wall Street, however, and that stock is up slightly ahead of the bell. The same is true for shares of retail building supply company Fastenal (FAST). Elsewhere, Gap Inc. (GPS) stock is indicating a notably lower opening this morning, after the apparel and accessories retailer reported a 6% decrease in March comparable-store sales. Finally, shares of H&R Block (HRB) are up nicely in the premarket, after the tax preparer agreed to sell its bank unit to BofI Federal Bank. If completed, the deal would go a long way in limiting HRB’s regulation by the Federal Reserve. – Matthew E. Spencer

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

Before The Bell - Well, so much for Wall Street's comeback. To wit, after the equity market had posted a trio of losses in succession last Thursday, Friday, and this past Monday--with the latter two selloffs being especially sharp--the buyers returned briefly. In fact, the upturn on Wednesday was notable, with the Dow Jones Industrial Average climbing by 181 points, while the NASDAQ, which had led the way lower, regaining 71 points, or an eye catching 1.7%. But those good feelings were fleeting, it would seem.

That is because yesterday, under pressure from unrelenting selling in the biotech and technology issues, the market headed sharply lower once again yesterday, and in the process more than wiped out the prior session's notable gains.

Meanwhile, the selling, which got under way somewhat hesitantly in the latest session, took on a life of its own by midday and the downturn then accelerated during the afternoon with nary a let up, save for some very half-hearted buying during the final half hour, which could not be sustained into the close. Indeed, by the end of the day, the averages were still very near their session lows. Once more, it seemed to be concerns about valuations (especially in certain high-growth, high-volatility equity groups), fears about Federal Reserve policies, worries about the eroding international situation (largely as it revolves around the fractious rivalry in Ukraine and the weaker economic showing in China), and uncertainty about the onset of first-quarter corporate earnings season.

Indeed, that quarterly event is now getting under way in earnest, with this morning's earlier release from banking giant and Dow-30 component JPMorgan Chase (JPM - Free JPMorgan Stock Report). Those results were disappointing, to say the least, and the stock is indicating a notably lower opening when trading resumes a bit later this morning. Meantime, as to the final numbers, the Dow Jones Industrial Average was off by 267 points; the NASDAQ had tumbled 130 points, or 3.1%; and the Russell 2000 had dropped 32 points, or 2.8%. Losing stocks overwhelmed winners on the Big Board and even more so on the NASDAQ. Moreover the VIX, or the fear quotient, rose sharply, gaining almost 15%, to end the day at just under 16. It was not a good day to be anything but short in this suddenly skittish equity market.

As to the latest setback, it was significant, in part because it seemed to deal a blow to the apparent complacency of the bulls, who after their midweek comeback were logically feeling emboldened once again. After all, that had been the pattern throughout 2013, as any brief selloff had always brought in the bargain hunters. Now, however, there appears to be a shift under way. True, it is too soon to say anything definitive on that count, as we are just days into the current reversal, and there is no assurance the buyers will not again come to the rescue. However, it is of some note that Wednesday's buying had no carry over, with any attempt to rally in the latest session being measured in minutes. The latest setback also pushed the S&P 500 Index below its 50-day moving average located a bit below 1,850. 

Importantly, all of this volatility has been taking place in something of an economic news vacuum, save for Wednesday's issuance of the Federal Reserve's minutes from its last (mid-March) FOMC meeting and yesterday morning's release of weekly jobless claims data. And, in fact, those releases were upbeat, as the Fed suggested that it would be in no hurry to raise interest rates, in part because it sees continued low inflation as a growth threat, and the government issued data showing a sharp reduction in layoffs this past week. But such news has not mollified the bears and the market seems to be caught in the grip of at least some short-term selling. Now, the paucity of news is being overcome, with the release of data just minutes ago on producer prices and the issuance of a survey on consumer sentiment in about an hour from now. Finally, how long this pullback goes on for may well be determined by earnings season, which by most accounts does not figure to be compelling, and by the market's tolerance for risk, which for now, at least, appears to be on the decline.

Now, a new day dawns, and not unexpectedly given the weak close in New York, the markets in Asia gave ground overnight, after seeing the markets tumble on our shores yesterday. Now, this morning, stocks are selling off broadly across Europe, with Germany's DAX down almost 2%, while in our country, the S&P 500 futures, which had been just slightly weaker early this morning, are now tumbling, losing some eight points, as the JPMorgan earnings miss is pressuring the markets. Meantime, the NASDAQ futures are now off by 22 points, presaging another weak opening when traders get going this morning. - Harvey S. Katz

At the time of this article's writing, the author did not have positions in any of the companies mentioned.