After The Close - After an upbeat start to the trading week yesterday, the major equity indexes started to the downside today and remained that way throughout the morning hours on the East Coast, but the selling initially was not all that encompassing as both the mid- and small-cap indexes were at times in positive territory. However, after the midday hour the selling picked up considerably, with all of the indexes joining in the downward movement. Unnerving the market were comments from Poland’s Foreign Minister that Russia is poised to pressure or invade Ukraine. That commentary, along reports of a significant buildup of Russian troops along the Ukraine border, clearly scared investors, as the S&P 500 Volatility Index (or VIX) rose sharply.

Overall, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index were 140, 31, and 19 points, lower, though investors should note that all three averages finished off of their session lows. The Dow 30 ended in the red for the eighth time in the last 10 trading sessions. Investors also should note that nearly all of the stocks in the index of 30 bellwether companies finished the session in the red, with the energy components Exxon Mobil (XOM - Free Exxon Mobil Stock Report) and Chevron (CVX - Free Chevron Stock Report), as well as chipmaker Intel (INTC - Free Intel Stock Report), inflicting the most damage. The only exceptions were the shares of aerospace giant Boeing (BA - Free Boeing Stock Report) and consumer products maker Procter & Gamble (PG - Free Procter & Gamble Stock Report). Technically speaking, the S&P 500 Index has broken through a few points of support in recent sessions and investors could now be looking at 1,916 as the new level of support for the broader index. One notable winner in the S&P 500 Index, though, was Coach (COH), as shares of the retailer rose on a strong quarterly report.

There were few places for investors to hide in the equity market. All of the top-10 sectors finished well into negative territory, with the biggest losses recorded in the energy, basic materials, financial, and technology groups. The energy stocks were hit hard today, as both oil and gasoline prices fell to six-month lows on the New York Mercantile Exchange.

The international worries drove investors out of risky assets and into more safe-haven securities. Fixed-income investments were in demand, as the yield on the 10-year Treasury note, which moves in the opposite direction to the price, fell a few basis points, to 2.47%, this afternoon. There also was demand for the U.S. dollar, which hit a multi-month high today, and the price of gold rose on the Chicago Mercantile Exchange.

The escalating geopolitical tensions in Eastern Europe pushed a few very positive reports on the U.S. economy to the back burner today. Specifically, the Institute for Supply Management, a Tempe, Arizona-based trade group, reported that nonmanufacturing activity rose to 58.7 in July, its best reading in nearly eight-and-half years. We also learned from the Commerce Department that factory orders increased by 1.1% in June, with an improved outlook for business spending responsible for the growth. Today’s data are yet another indication that the U.S. economy is strengthening and the weather-related first-quarter GDP decline may have been a bit of an outlier.

Looking ahead to tomorrow, it will be interesting to see if the bears pick up where they left off or will today’s event-driven selloff present a buying opportunity. Though the bulls have staggered some over the last fortnight of trading, they do have a few feathers in their caps, most notably some strong U.S. economic data of late and a constructive second-quarter earnings season. If cooler heads eventually emerge on the international front, we think the bulls can stage a rally. However, the prospects of a volatile near-term market would be our best guess right now. - William G. Ferguson

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


Market Update - After a lower start to the trading session, and some half-hearted attempts to recoup those initial losses, so that the stock market had an essentially mixed look to it at mid-session, the leading averages now have started to plunge.

Of note, the early weakness was borne of some disappointments on the profit side and concerns that the economy's strength may be pushing the Federal Reserve in the direction of an earlier monetary tightening than the bulls have been hoping for.

However, in the past hour, or so, the bottom has fallen out of this heretofore resilient bull market. Indeed, as we head toward the final 90 minutes of the trading day, the Dow Jones Industrial Average has tumbled by more than 170 points; the Standard and Poor's 500 Index has shed 21 points; and the NASDAQ has been hammered by 40 points.

All 10 principal market sectors are being hit, with the largest losses in the energy and basic materials issues. Not surprisingly, losing stocks are swamping winners on both the Big Board (by three-to-one) and the NASDAQ (by almost two-to-one). Earlier, there had been a virtual standoff.

What has done in the bulls this afternoon have been escalating tensions between Russia and the West, with the former's Prime Minister saying that he has ordered his government to prepare retaliatory sanctions against the United States and Europe for their resorting to economic sanctions against Russia previously in the wake of the latter's moves against Ukraine. It is not easy to be long equities this afternoon. - Harvey S. Katz, CFA

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


12:10 PM EDT - The U.S. stock market got off to a weak start this morning, but is now starting to recoup some of these losses. At just past noon in New York, the averages are well off their session lows. The Dow Jones Industrial Average is down 64 points; the broader S&P 500 Index is off eight points; and the NASDAQ is lower by 12 points. However, the smaller names are making strides, as the Russell 2,000 Index is in positive territory. Too, the mid cap names are advancing and that may be a positive indicator. For now, market breadth shows a mixed session, with declining stocks just about even with advancers on the NYSE. Many market sectors are trading lower, though. Specifically, weakness can be found in the energy and basic materials names. In contrast, the industrials and the healthcare issues are moving higher.

The stock market has pulled back a bit over the past few days, but seems to have found some temporary support. Market corrections, assuming they do not become too extreme, are likely healthy, as they allow traders to take some profits, establish new positions, and enter sectors that may have been overlooked.

Investors received constructive economic news this morning, and that may be providing some support to the session. Specifically, the ISM Non-manufacturing Index for July came in at 58.7. This reading exceeded last month’s figure, and was better than had been anticipated. Further, factory orders increased 1.1% in June, coming in a bit ahead of consensus. Tomorrow, will be a relatively light day for economic reports. However, the nation’s trade balance for the month of June is set to be released. Economists are not expecting much of a change from the May reading.

Finally, the corporate reports continue to stream in. Today, we heard from Coach (COH). That stock is up after the apparel maker put out a better-than-expected report. Too, shares of CVS Caremark (CVS) are headed higher on a decent release. Meanwhile, Dow component Disney (DIS - Fress Disney Stock Report) is slated to issue its figures after the market closes today. - 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 - All eyes remain on earnings as we head further into the dog days of summer:

The retail segment is grabbing many of the headlines this morning. Retail chain Target Corp. (TGT) announced that it is cutting its second-quarter outlook citing costs associated with its debt burden and the high-profile data breach that occurred late last year. Its shares were edging lower in premarket trading.  On the other side of the coin, Office Depot Inc. (ODP), the office-supply retailer reported a quarterly loss that was in line with expectations and has upped its guidance for full-year earnings. This stock is on the incline early this morning.

Elsewhere, insurance titan American International Group (AIG) disclosed better-than-anticipated earnings results and announced a settlement of $960 million stemming from the company’s near collapse in 2008. This is just another stride in the firm’s recovery and investors applauded the news in the premarket.

In the various arms of the healthcare field, the ubiquitous pharmacy CVS Caremark Corp. (CVS) reported profits and sales that bested Wall Street’s outlook and lifted full-year guidance much to the delight of its shareholders. Moreover, hospital operator Tenet Healthcare (THC), which has struggled of late, also lifted its 2014 expectations after revenues in the second quarter came in handsomely ahead of consensus. Shares of each company were higher in early trading.

In a bit of non-earnings related news, shares of media company Gannett Co. (GCI) were up sharply in the premarket after it unveiled a plan to spin off its publishing business into its own publicly traded company. The remaining operations will then focus on broadcasting and digital. Management also confirmed rumors that the company will be buying the remaining stake in Cars.com that it does not already own for $1.8 billion.   - Erik M. Manning

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


Before The Bell - The stock market left the starting gate on a positive note yesterday, following a rather difficult week, which had preceded it.  The main impetus for the earlier weakness had been geopolitical concerns coupled with some worries that the Federal Reserve might advance the starting date of its widely anticipated monetary tightening.

All along, the expected move in that direction, which would entail the first of what would likely be a series of interest rate increases had been timed for mid-2015. More recently, though, some rate bears have feared that the economy might be heating up, in part because of a much stronger-than-expected increase of 4.0% in second-quarter GDP growth. Such fears, however, may have been eased some by the report on Friday morning of a decent, but hardly eye-catching, increase in non-farm payrolls in July of 209,000. A somewhat larger gain had been the forecast. In response, we managed to see some early and initially modest bargain hunting yesterday.

But those gains were soon pared and stocks drifted in and out of positive territory throughout the morning before settling onto a more positive trend after lunch. The gains then largely increased into the close. All told, the Dow Jones Industrial Average, aided by near-two-point rise in shares of entertainment giant Walt Disney (DIS - Free Disney Stock Report), rose 76 points; the Standard and Poor's 500 Index climbed 14 points; and the tech-heavy NASDAD jumped 31 points. The strength in Disney, which reports its results after the close of trading today, may well have been due to the success this past weekend of its film ''Guardians Of The Galaxy'' at the box office. 

Meanwhile, with the jobs report and the latest musings from the Federal Reserve following its latest FOMC meeting last Tuesday and Wednesday, we sense that these increasing rate fears may be a little exaggerated. In truth, some rate worries are realistic, as the Fed will most likely tighten by sometime next year. The difference of a month or two in either direction should not make all that much difference for investors. Then, of course, there is the geopolitical risk, which is more of a problem, both from the point of view of the situation in Ukraine and the spreading violence across much of the Middle East. Such event risk, however, is likely a greater concern for Europe--especially with regard to East-West relations--due to the Continent's greater proximity to Ukraine.

Looking at yesterday, it was a light economic news day in a fairly light week, which will generally just feature today's report at 10:00 AM (EDT) on non-manufacturing activity and tomorrow's data on the international trade situation. As to earnings season, the other potential shoe to drop on stock market sentiment, it is winding down, with most of the larger companies in the second-quarter books already, save for the nation's retailers, which largely are on a July earnings cycle and are thus a week or two away from their releases. Still, there are enough smaller companies due to issue their results to possibly shake things up yet.

Taking all of this in, our sense is that investors are looking rather cautiously at things, awaiting the Fed's next move, the unfolding of various international scenarios, and further economic tidings to ascertain whether they should be adding to positions of lightening up on their stakes. This uncertainty, plus the usual pattern of low volume during the summer season, could make for some volatile trading days to come--although yesterday was not one of them.                 

Looking out to a new day now, as noted, we will need to keep a wary eye on the non-manufacturing report from the Institute for Supply Management due out in about an hour from now and the after-market profit release from Walt Disney. Before that, though, stocks in Asia were mostly lower overnight, but they are generally climbing in Europe so far this morning. Asia's stocks were hurt by a disappointing manufacturing survey out of China. On our shores, meanwhile, investors are awaiting later economic reports, headlined by the ISM non-manufacturing survey. And, for now, we seem to be setting up for a Monday-Tuesday reversal, at least at the outset, as the Dow, S&P, and NASDAQ futures are all pressing lower with some notable downward momentum in place.

At the time of this article’s writing, the author held positions in one or more of the companies mentioned.