After The Close - Sometimes bad news is good news on Wall Street, and today appeared to be one of those days as stocks rallied in spite of disappointing data regarding July retail sales. Retail spending had been expected to match June’s moderate pace, but stalled instead.

The reason the figure turned out to be somewhat of a blessing in disguise was because it provided support for the belief that the Federal Reserve can keep interest rates lower for a longer period of time. Recent improvement in figures related to other areas of the economy had given rise to the thinking that the days of zero interest rates may be running out. Expectations for a quicker return to a normal level of interest rates have kept investors on edge of late. In any case, the lull in retail sales is not expected to be longlasting, given gains in the labor market this year.

Also helping stocks recover from their selloff of the past few weeks is a relative calming of tensions in Iraq and Ukraine. The however-brief de-escalation of geopolitical tensions, combined with less of a rationale for interest rates to rise right away, have allowed the bulls to recoup some lost ground.

At the end of the day’s trading, the Dow Jones Industrial Average was 91 points to the good; the NASDAQ was up 45 points, or a more formidable gain on a percentage basis than the Dow, while the S&P 500 gained 13 points. The advance/decline line showed many more winners on both the Big Board and the NASDAQ.

In other markets, bonds were mostly steady, as the Treasury Department sold $24 billion of 10-year notes at 2.44%. Meanwhile, domestic oil prices continued to trade below $100 a barrel, as U.S. stockpiles remain more than adequate. Moreover, fighting in Iraq has come nowhere near the fields in the southern part of the country where by far the largest amount of its oil is produced, and there are signs that production from Libya is rising.

The drop in oil prices over the course of the year is a plus for the economy, since it has translated into less expensive prices at the gasoline pump, particularly benefiting vacationers during the current summer driving season.

Tomorrow brings a followup to today’s report on retail sales, as a number of individual retailers, such as Dow-30 component Wal-Mart Stores (WMT - Free Wal-Mart Stock Report), post quarterly results. - Robert Mitkowski

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


12:15 PM EDT - The U.S. stock market opened higher this morning, and is currently extending its gains. At just past noon in New York, the Dow Jones Industrial Average is up close to 100 points; the broader S&P 500 Index is ahead 13 points; and the NASDAQ, which is displaying leadership, is advancing 42 points. Market breadth suggests some underlying strength to today’s session, with rising stocks outpacing decliners by almost three to one on the NYSE. Strength can be found in the healthcare group, thanks to sizable gains in the biotechnology names. The broader technology sector is advancing, too, as the Philadelphia Semiconductor Index (SOX) is leading the way higher. Meanwhile, the basic materials sector and some of the consumer names are underperforming, relative to other areas of the market.

Stocks have firmed up considerably, after pulling back a couple of weeks ago. It is encouraging that the bulls moved in to support equities and a deeper slide has been averted, at least for now. However, it will be important for traders to extend recent gains, if the market is to move back to high ground. Volumes have been light lately, and broader participation may well be necessary.

Traders shrugged off some weak economic news this morning. Specifically, retail sales were unchanged for the month of July, while many analysts had been looking for a small increase. The figure, excluding automobile sales looked a bit better, but was still sluggish. Meanwhile, business inventories increased 0.4% in June, more or less matching the consensus view. Tomorrow, the employment situation will be the center of attention, as the weekly initial and continuing jobless claims are set to be released. We will also get a look at monthly import and export prices.

Finally, traders received a few earnings reports late yesterday afternoon and early this morning. Cree, Inc. (CREE) stock is off after the technology company issued a disappointing outlook. Also, Deere (DE) shares are down slightly, as the agricultural equipment maker issued lackluster guidance. After the bell today, we will hear from Cisco (CSCO - Free Cisco Stock Report) and NetApp (NTAP). - 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 SurveyThere are some earnings reports to be aware of today, and the news was disappointing, overall. The biggest loser appears to be Cree, Inc. (CREE). Indeed, shares of the semiconductor company are down sharply ahead of the bell due to June-period results that were lackluster. Guidance did not live up to investors’ expectations, either. Shares of farm equipment manufacturer Deere & Co. (DE), department store operator Macy’s (M), watch and accessories retailer Fossil (FOSL), fiberoptic telecommunications equipment maker JDS Uniphase (JDSU), and Myriad Genetics (MYGN), a leader in genetic testing, are all moving lower in the premarket on earnings news, as well, albeit to a lesser extent than CREE stock. – 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 - After back-to-back wins for the stock market last Friday and on Monday of this week, the early action in the futures yesterday morning seemed to suggest that the bulls might be able to produce the proverbial hat trick, or, in sports terminology, three wins in succession. However, worries about the international situation, which is never very far from the minds of investors these days, quickly threw cold water on that prospect, especially as there were no major economic reports around to take traders away from such goings on around the world.

Specifically, after some mildly positive action at the outset, the equity market abruptly turned lower. To be sure, the pullback was not material at any point in the day, with the leading averages never all that far into the red--at least by recent standards. In fact, at its morning lows, the Dow Jones Industrial Average was never off by much more than 50 points, a comparatively modest setback given the better than 16,500 level at which this 30-stock blue chip index has been trading at recently. Similarly soft performances were seen on the more broadly configured Standard & Poor's 500 Index and on the NASDAQ. The selloff in the small- and mid-cap composites was greater, but even there, no rout was in order.   

As noted, the focus of the latest skittishness was global, notably as jitters persisted amid worsened tensions between Ukraine and Russia. There also were lingering concerns about sectarian wars in the Middle East. Fears about geopolitical discord and a potential Federal Reserve-initiated interest-rate hike before mid-2015--the most often-cited target date for the central bank to act in this regard--have encouraged investors to scale back on risk and keep some of their powder dry. Arguing against a more sizable setback at this time are the continuing low interest rates, which make alternative investments, such as fixed-income instruments, relatively unattractive.

Of course, the focus off shore, while logical given the strife that seems to now be encompassing wide swaths of the globe, is also being fed this week by the paucity of economic and earnings news on our shores. However, some of this will change over the next three days, as earnings news picks up with two Dow companies scheduled to be out with their quarterly results over the next 24 hours. Also, the government has just issued data on July retail sales, which indicated no gain last month. An increase of 0.2% had been the consensus forecast. Going forward, now, data on jobless claims, industrial production, factory use, and producer prices will all be out in the next 48 hours, or so. That should keep investors occupied, although given the unsettled nature of the international situation, global matters will not be far from the consciousness of investors in the short run. Still, we did get one report of note yesterday, as we saw figures showing that job openings in June rose to a multiyear high. Such a development, which would seem consistent with a better employment outlook, could induce the Federal Reserve to step on the brakes a bit sooner than many now suspect, opting to start raising interest rates early in 2015.          

As to the markets yesterday, we saw the Dow Jones Industrials, under varying amounts of pressure for much of the session, finally close the day with a nominal loss of nine points. The Standard and Poor's 500 Index eased by just three points; while the NASDAQ edged down by a dozen points. The S&P Mid-Cap 400, meanwhile, shed six points, or 0.4%, while the loss in the small-cap Russell 2000 Composite was a bit steeper on a proportionate basis, shedding almost nine points, or 0.8%. There were too few catalysts to stoke any aggressive buying during the session. Once again, trading was light. All told, trading was at the fifth lowest level of the year. It takes a lot to get the bulls and the bears going in the summer, it would seem.

Looking out to a new day, we find that the stocks in Asia were higher overnight, led forward by Japan's Nikkei, while the bourses in Europe are higher so far this morning, led into the plus column by the Paris CAC-40 and the Frankfurt DAX. The latter, in fact, is now up just over one percent on the day. Over here, meanwhile, the early indications are strongly positive, as well, as the Standard and Poor's 500 Index futures are ahead by some eight points, while the NASDAQ futures are showing a 17-point gain at this hour. Such action would suggest that the market will open solidly to the upside when trading resumes in less than an hour from now.  

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