After The Close - At the midway point of February, the month is looking like a whole different ballgame than in January for Wall Street. Entering the month licking their wounds after very disappointing showing for equities in January, investors were wondering whether the U.S. equity market was headed for a correction after an impressive nearly five-year bull run. However, this month—save for a notable one-day drop in the month’s first trading day—has been a good one for those long equities. The impressive fortnight of trading has erased a good deal of the Dow Jones Industrial Average’s January losses; pushed the NASDAQ slightly higher; and has the S&P 500 Index again on the doorstep of its all-time high recorded late last year.

Moreover, today’s session was another very constructive one for those long stocks. Even mixed news on both the earnings and economic fronts did not keep the buyers from the equity market. When all was said and done, the larger-cap Dow Jones Industrials and S&P 500 Indexes were up 127 and nine points, respectively, and the tech-heavy NASDAQ, despite lackluster showings from technology and telecommunications stocks, eventually after some early weakness made its way into positive territory and tacked on # points by the final bell. The showing capped another winning week for Wall Street, the second consecutive positive five-day stretch. For the week, the Dow 30, the NASDAQ, and the S&P 500 were up 2.3%, 2.9%, and 2.3%, respectively.

From a sector perspective, it was mostly a sea of black ink for the 10 major groups, save for the aforementioned telecommunications issues. Leadership came from the energy, basic materials, and industrial stocks. Within the basic materials space, the shares of the precious metals and mining companies were once again the standout performers. In particular, the gold stocks performed well, as the precious metal shined for the eight-consecutive day. Conversely, the telecommunications sector, the only laggard among the major groups, was hurt by a lackluster showing from the stocks of the wireless telecommunications providers. Overall, advancers led decliners by nearly two-to-one on the Big Board, but the margin was much thinner on the NASDAQ, which is not all that surprising given the aforementioned lackluster showing from the technology and telecom issues.

As noted, the day’s economic news was at best mixed. Before the start of the trading day, we received a weaker-than-expected report on industrial production and capacity utilization. Specifically, industrial production slipped 0.3% in January after advancing by the same percentage in the final month of 2013. However, the data, which came in below expectations, was, like most other economic reports this month, quickly brushed off as being hurt by weather-related issues. Such sentiment, along with a slightly better-than-expected reading on consumer sentiment from the University of Michigan, appeared all investors needed today to remain bullish on equities.

Investors also got some good news from overseas earlier today. The markets both here and on the Continent were helped by encouraging data from Europe, which showed that the euro-zone economy grew by a slightly better-than-expected 0.3% in the final quarter of 2013, with growth in both Germany’s and France’s gross domestic product. The report showed that the euro zone is continuing to recover from its latest recession and offered potential for a healthier 2014. Strength in the euro zone—a prominent trading partner of the U.S.—also is welcome news for the local economy. Not surprisingly, Germany’s DAX and France’s CAC-40 Indexes finished with respective gains of 0.7% and 0.6%.

Turning back to the homeland, our sense is that the economy will play a big part in whether the bulls can keep the good times going next week. On the business beat, we will get data on producer prices and housing starts (Wednesday), consumer prices and initial weekly jobless claims (Thursday), and existing home sales (Friday). The investment community also will be keeping a close eye on the minutes from the latest Federal Open Market Committee meeting, which is scheduled to be released on Wednesday afternoon. Meantime, earnings season is rapidly nearing a conclusion, but we will get the latest quarterly results from Dow-30 components Coca-Cola (KO - Free Coca-Cola Stock Report) and Wal-Mart Stores (WMT - Free Wal-Mart Stock Report). Investors should also note that heavily traded and volatile Herbalife (HLF) is scheduled to report its latest quarterly results after the close of trading on Tuesday. The markets will be closed on Monday for President’s Day.   - William G. Ferguson

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


12:30 PM EST - The U.S. stock market is making modest, but somewhat mixed, progress today. It remains to be seen if stocks can hold onto their gains through this afternoon, especially as we are entering a three-day holiday weekend, and some traders may be inclined to take profits. At just past noon in New York, the Dow Jones Industrial Average is up 72 points; the broader S&P 500 Index is ahead four points; but, the NASDAQ is down seven points. Moreover, the Russell 2,000, which had a strong session yesterday, is a bit lower. Still, market breadth shows a slightly positive bias, as advancing stocks are just ahead of decliners on the NYSE. Most of the major market sectors are making strides, which is encouraging. There is leadership in the basic materials names, and gold is having a good session. The precious metal is up about 1%, to over $1,300 an ounce. The energy sector also is up a bit. In contrast, the financial group is lagging.

Technically, the stock market has put in an impressive rally over the past several sessions, and so far, the move seems to have some staying power. The S&P 500 Index is now just about 1% off its 52-week high, and may well encounter some resistance as it looks to enter new high ground. Clearly, a push higher would be bullish indicator. Moreover, due to the likely media coverage, this event might entice retail investors into the market. The VIX is lower again today, at about 13.75.

Traders received some mixed economic news today.  For one, the manufacturing sector has been a bit choppy lately. Industrial production declined 0.3% in January, where a slight gain had been expected.  However, the University of Michigan’s Consumer Sentiment Index came in with an initial reading of 81.2 for February, which was a bit better than anticipated.

On the earnings front, we heard from a few widely-followed names. Agilent Technologies (A) stock is off, as that company issued weak guidance. But, Cliffs Natural Resources (CLF) is seeing its shares rise, after a stronger-than-anticipated release. - 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 SurveyThe earnings parade continues, and one of the biggest disappointments in the most recent batch of reports came from Weight Watchers (WTW). Indeed, shares of the weight loss services provider are plunging in the premarket, after the company reported weak December-period results and issued an outlook that fell well short of investors’ expectations. Other stocks moving lower ahead of the bell on earnings news include nutritional supplements retailer GNC Holdings (GNC), apparel company V.F. Corp. (VFC), insurer American International Group (AIG), jelly and jams maker The J.M. Smucker Company (SJM), and bio-analytical and electronic measurement solutions provider Agilent Technologies (A).

Earnings reports were not all bad, however, and shares of packaged foods giants Kraft (KRFT) and Campbell Soup (CPB), telecommunications equipment provider Brocade (BRCD), and mining company Cliffs Natural Resources (CLF) are being shown some love by investors on this Valentine’s Day. 

On the M&A front, shares of Joseph A. Bank (JOSB) are moving lower in the premarket, after the menswear retailer agreed to pay more than $800 million in cash and stock to buy fellow apparel seller Eddie Bauer from private-equity firm Golden Gate Capital. – 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 - The stock market, which had broken its four-day winning streak on Wednesday, with the Dow Jones Industrial Average and the Standard and Poor's 500 Index both edging lower, fell back further at the start of the trading day yesterday, and within minutes, the Dow was off about 100 points and the S & P 500 Index was lower by some 10 points. And this time, they were joined by the NASDAQ, but just barely, with that tech-laden index off only about six points at its nadir.

However, even though the stock market again looks extended and somewhat overbought in the short term, the selling did not get out of control. In fact, within an hour or less of the open, the selling evaporated and the buyers took hold. Before noon in snowy New York City, the averages had all moved into the black, and the buying increased into the lunch hour and through much of the ensuing afternoon. By the close, the Dow Industrials had added 64 points, climbing past the 16,000 mark once again. The S&P 500 Index added 11 points, while the NASDAQ again displayed leadership, gaining 39 points. The S&P 500 has moved past the 1,800 mark once again, and is now only about 20 points from its all-time high. The NASDAQ is fewer than 10 points from its best level ever and remains higher on the year.

Moreover, the advance was not limited to the large-cap indexes, and the S&P Mid-Cap 400 posted another strong gain, while the small-cap Russell 2000 did proportionately better. Also, many more stocks rose yesterday on the Big Board than declined. It also was a good day to be long gold, as the precious metal rose once again, topping the $1,300-an-ounce mark for the first time in three months. The jump in gold was primarily attributable to the disappointing drop in January retail sales reported an hour before the stock market opened. Gold had not closed above $1,300 since last November 7th. The gold stocks, led by Newmont Mining (NEM), rose nicely on the day, continuing the firmer trend in this investment class for the past couple of weeks. However, results from the gold companies are not expected to be uplifting in the current quarter, given the earlier declines in the price of the metal. Meanwhile, the precious metal is up again this morning, tacking on another $15 an ounce, and, appropriately, gold stocks are rallying anew.     

As to the retail sales report, January spending dropped by 0.4%, primarily on weaker auto sales. Excluding the auto component, aggregate consumer spending activity was flat last month. It had been expected to rise slightly. Blame for the weak retail result was laid on the doorstep of poor weather, including record low temperatures and the frequent snow storms. And February has been no better, with snow blanketing much of the East Coast over the past 24 hours. It seems that the weather is being blamed for much of the listless business activity, not only in retailing, but also for manufacturing, housing, and job creation. Now, later this morning, the Commerce Department will issue its latest figures in industrial production and factory use. The weather probably was also a factor there. It will be interesting to see what happens when spring arrives.

Then, there were earnings, where we saw some disappointing results and listless forecasts from Whole Foods (WFM) and Dow-30 component Cisco Systems (CSCO - Free Cisco Stock Report). Both stocks weakened in trading yesterday. But they were clearly in the minority. Meanwhile, in earnings releases so far this morning, we are seeing some further misses, notably Weight Watchers (WTW). That stock is plunging in the pre-market, mostly on very weak 2014 guidance. Conversely, metals provider Cliffs Natural Resources (CLF) is showing a large pre-market gain on better results.   

As to the performance of the markets overseas, we note that stocks in Asia were mixed overnight, with Japan being notable to the downside, while in Europe, the principal bourse are modestly in the plus column thus far this morning. On our shores, the early tale of the tape shows that the S&P 500 futures are essentially flat, while the NASDAQ futures are up about eight points, presaging a slightly higher opening when trading resumes here in less than an hour from now.

At the time of this article writing, the author had positions in CSCO.