After The Close - The major U.S. equity indexes were able to recover a small portion of yesterday’s outsized losses, as a typical Monday-Tuesday trading reversal seemed to be in play today. Helping matters was some constructive earnings news from Corporate America (more below). But by the closing bell the bears were once again trying to be heard from, as the gains for the Dow Jones Industrials were pared some, which could be a sign that today’s advances may be more of a “dead cat” bounce than a definitive statement from the bulls. Still, when all was said and done, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index had added 72, 35, and 13 points, respectively. It was a bit more productive day in the small- and mid-cap markets on a percentage basis, but it should be noted that those markets suffered even bigger percentage declines yesterday. Overall, advancing issues led decliners by a healthy margin on both the Big Board and the NASDAQ.

From a sector perspective, most of the top-10 groups finished in the black, with notable advances by the transportation and banking stocks. Some of yesterday’s biggest laggards, including the industrial and financial stocks, were today’s leaders. A pull back in the market’s volatility—the S&P 500 Volatility Index (or VIX) fell more than 13%, to below 19 in the latest session—also produced some sector rotation out of the higher-yielding, less risky utilities issues. In the same vein, bond prices fell, as demand for safe-haven fixed-income instruments eased a bit today, with the market appearing less jittery. The same sentiment weighed on gold prices.

As noted, the earnings news, which overshadowed a light day for economic data, was somewhat upbeat today. On the positive side were reports from Michael Kors (KORS) and Yum Brands (YUM). Indeed, shares of the apparel retailer, which performed exceptionally well in 2013, were up again today after reporting a 77% jump in third-quarter profits, while the restaurant chain owner moved higher after the company reaffirmed its 2014 guidance after the close of trading yesterday. Conversely, it was not a good day for the shares of Archer Daniels Midland (ADM), Stanley Furniture (STLY), J.C. Penney (JCP), and Dun &Bradstreet (DNB) after those companies released their latest quarterly results.

Meantime, there was some notable non-earnings news from Corporate America today. Of note, was the appointment of a new leader at Microsoft (MSFT). Microsoft veteran Satya Nadella, who played a big role in the company’s emergence in the cloud computing area, replaces Steve Ballmer as CEO. Shares of the software giant were little changed on the news. Elsewhere, reports surfaced this afternoon that struggling electronics retailer RadioShack (RSH) will be closing roughly 500 brick-and-mortar stores within months—and the company’s stock fell further.

Looking ahead to the remainder of the week, tomorrow will be a big day as it will answer the question of whether the bulls have some fight in them or was today’s move higher basically a nonevent. That said, one thing that we can probably expect over the remaining three trading days of this week is a volatile stock market, as investors will be bombarded with a good deal of earnings and economic news, including quite a bit of data on the health of the labor market. Tomorrow brings data on private payroll creation from Automatic Data Processing (ADP), then on Thursday we will get figures on initial weekly unemployment claims, and then the week concludes with the much-anticipated report from the Labor Department on employment and unemployment for January on Friday. The latter report could once again be affected by weather-related issues, as was the case during December. Investors will also get data on nonmanufacturing activity (tomorrow) and the trade gap (Thursday). - 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. market is rebounding today, after yesterday’s sharp selloff in a resumption of the Monday-Tuesday reversal. As we pass the noon hour in New York, the major averages are near the session highs, suggesting that the move may well hold up through the afternoon. The Dow Jones Industrial Average is up 79 points; the broader S&P 500 Index is ahead 13 points; and the NASDAQ, which is displaying some leadership, is tacking on 40 points. Market breadth is favorable, with advancing issues ahead of decliners by about two to one on the NYSE. Most of the market sectors are rebounding, led by the financial names, as the banks and financial services stocks are doing quite well. The basic materials issues are also ahead, thanks to gains in the chemical issues. In contrast, investors are less interested in the utilities today, as that group is trading lower.

Technically, stocks have displayed notable weakness over the past couple of weeks, culminating in yesterday’s sharp drop. Also, that move was accompanied by a large rise in trading volumes, suggesting that the large institutions were taking action along with the smaller retail investors and traders.  It is not surprising that the market is bouncing today, as some bargain hunters may be taking notice. However, so far today’s session has not been overly impressive, and it still remains to be seen if the market can rally in a meaningful way. The VIX, now below 19, is lower today, and that is worth noting, as it may suggest that sentiment is turning less bearish after yesterday’s selloff.

In today’s economic news, factory orders slipped 1.5% in December, where analysts had been calling for a slightly sharper decline. The economic news has been a bit light yesterday and today, but that will change as the government’s employment report for January is due out on Friday. That release will be widely watched, especially given the way the market has been acting lately.

Finally, traders received a few decent earnings reports this morning. Specifically, Michael Kors (KORS) issued strong results, and that stock, which has been a leading issue, is moving up sharply. UBS (UBS) shares are also higher, after the large financial institution put out an encouraging release. After the close, we will hear from biotech provider Gilead Sciences (GILD). - 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 SurveyStocks suffered heavy losses yesterday, but the markets seem poised for some recovery today, aided by solid December-period earnings reports from apparel company Michael Kors (KORS), restaurant operator Yum! Brands (YUM), financial services provider Hartford (HIG), medical supplies company Hologic (HOLX), drugmaker Gilead Sciences (GILD), real estate investment trust General Growth Properties (GGP), and energy company Anadarko Petroleum (APC). Indeed, all of these stocks are indicating higher openings this morning, with KORS showing the most strength.

However, not all companies impressed investors with their December-period results and/or outlooks. To wit, shares of video game developer Take-Two Interactive Software (TTWO), paper and packaging manufacturer International Paper (IP), and automaker Toyota (TM) are all moving lower ahead of the bell on earnings news.

Elsewhere, on the M&A front, shares of ATMI (ATMI) are surging in the premarket, after the semiconductor company agreed to be acquired by industry peer Entegris for $34 a share in cash.

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

Before The Bell - Hopes for an early February bounce on Wall Street, following a moderately lower January, were dashed early yesterday, and at least for one day, the bears remained in charge. This is a rare shift in momentum after many months in which the bulls had established and, subsequently, maintained the high ground.  

To recap, the leading averages, notably the Dow Jones Industrial Average, had tumbled 5.3% last month, to start the new year in the red for the first time since 2010. At the same time, the Standard and Poor's 500 Index shed 3.6% and the NASDAQ eased by 1.7%, after having been in the plus column for much of the time. The small- and mid-cap indexes, as represented by the Russell 2000 and the Standard and Poor's Mid-Cap 400 also pressed modestly lower last month.  

Behind this early setback had been some normal, and overdue, profit taking in a frothy equity market following the historic bull run of much of the prior five years. Now, following yesterday's massive setback, in which the aforementioned blue chip composite tumbled 326 points, the NASDAQ dropped by 107 points (or 2.6%), and the small- and mid-cap indexes did proportionately worse--with the S&P Mid-Cap 400 plummeting by 47 points, or 3.6%--there seems to be more at play than just some profit taking.

On point, the latest day was also affected negatively by a sudden slowdown in U.S. manufacturing growth. Specifically, the Institute for Supply Management reported that its gauge of industrial activity came in at 51.3 last month, some five points below expectations and well off of the 56.5 reading set in December. Much of the blame for this surprise deceleration could probably be pinned on the awful weather than affected much of the nation during this difficult winter, which only worsened yesterday as snow blanketed much of the eastern third of the country. Still, weather related or not, the 51.3 number was a clear setback for the economic optimists. Also, reports on January auto sales were disarming, as the weather likely took a toll on this key sector, as well. The major auto names fell in response yesterday.   

Worse, there were new rumblings from abroad, as emerging market fears continued to blanket the global markets. Indeed, stocks in Europe fell anew, in a pullback that mirrored the negative mood in Asia, which only worsened after manufacturing data in China raised concerns about a slowdown in the world's second largest economy.         

Taken as a whole, yesterday was a further rude awakening for our market, with all of the indexes and just about all of the individual sectors showing considerable weakness. Not surprisingly, losing issues overwhelmed gaining stocks on both the Big Board and the NASDAQ. It should be noted that even after yesterday's notable setback in our equity market that we are still a modest ways from a correction, which is defined as a 10% drop in the leading indexes--especially in the S&P 500 Index and the NASDAQ, which are off just 5.8% and 4.3% for the year thus far. The Dow, which is off 7.3% in 2014 is that much closer to a correction. Importantly, while the market is exhibiting bearish behavior, we remain quite far from a bear market, which usually is defined as a 20% decline.

Meanwhile a new day is now upon us, and while we are scheduled to get no major economic issuances at home, there will be a further succession of earnings reports. As to business news, we are due to get the companion report on non-manufacturing activity tomorrow and then on Friday, the government report on monthly non-farm payrolls and the unemployment rate. That issuance will be watched very closely.

Finally, following our notable setback yesterday, the markets in Asia and in Europe have been trending lower as well overnight and this morning respectively. In Asia, meantime, the Hang Seng Index has fallen into a correction, one day after the Nikkei 225 had joined the correction crowd. This latter index fell another 4% overnight, and is now perilously close to falling under 14,000. And on our shores, the equity futures are pointing to a strong early rebound. The big hope for the chastened bulls is that we will get a Monday-Tuesday reversal, as is often the case. We shall see. - Harvey S. Katz

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