After The Close - The first four trading days of 2014 have been a bit of a seesaw ride for investors. The bears got a quick jump in the new year late last week, but the last few trading days, which have seen market breadth in favor of the advancers, have gone to the bulls, although the principal large-cap indexes have been mostly lower throughout. Today, trading was decisively positive, with the spread between winning and losing issues rather pronounced on both the Big Board and the NASDAQ, to the tune of more than two to one on the both exchange. It was a big reversal from the prior few days on the tech-heavy NASDAQ exchange.

At the closing the bell, the Dow Jones Industrial Average, the NASDAQ, the S&P 500 Index were holding respective gains of 106, 40, and 11 points. It was also a good day to be long both small- and mid-cap stocks, as those issues were in favor too. That said, we still don’t think today was all about investors adding more risk to portfolio, as the more defensive-minded sectors, including the healthcare, consumer staples and utilities stocks, were in the most demand. 

There appeared to be a few notable factors pushing equities nicely higher today. First, investors reacted positively to news last night that Congress had approved Janet Yellen as the next Chairperson of the Federal Reserve. The sentiment on the Street is that the dovish new Fed leader will be much more apt to push for a continuation of the central bank’s accommodative monetary policies that have played a huge role in the recent extended bull run on Wall Street. Also helping equities was another positive report on the U.S. economy and some encouraging business data from Europe. Specifically, an hour before the commencement of trading on these shores, the Commerce Department reported that the nation's trade deficit had fallen sharply during November, tumbling to $34.3 billion from October's downwardly revised $39.3 billion. This was viewed as yet another sign that the U.S. economy is strengthening.

Beginning tomorrow, the economic news will be dominated by data on the U.S. labor market. Before the commencement of trading, we will get data on private-sector payrolls from Automatic Data Processing (ADP), Thursday will bring weekly initial jobless claims figures, and then on Friday, we will get the much-anticipated nonfarm payroll figures for the month of December. These reports bear watching as they may play a significant role in the Fed’s monetary policy meeting later this month.

Meantime, we are now only a few days away from the start of earnings season, which unofficially kicks off after the close of trading on Thursday when aluminum maker and former Dow-30 component Alcoa (AA) releases its latest quarterly results. However, investors should not expect the quarterly reports to begin pouring in, as the first few trading days will be light on earnings. The only other notable reporters this week are retailers Family Dollar Stores (FDO) and PriceSmart (PSMT). Friday is a particularly sparse day for earnings, so there will be little scheduled news of note to draw the investment community’s attention away from the latest jobs creation report.   -William G. Ferguson 

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


12:15 PM EST - The U.S. stock market is advancing strongly this morning. Moreover, so far, it looks as though the bulls may well be able extend their buying campaign through this afternoon. At past noon in New York, the Dow Jones Industrial Average is up 100 points; the broader S&P 500 Index is ahead nine points; and the technology-heavy NASDAQ is higher by about 32 points. Market breadth confirms a decidedly positive showing to today’s session, as advancing issues are well ahead of decliners on both the NYSE and the NASDAQ.

Almost all of the market sectors are in positive territory, with leadership in the healthcare area. The technology issues are also higher, with strength in the semiconductor stocks. Some consumer names, too, are making progress. In contrast, there is some weakness in the basic materials area, as the precious metals names are slipping. Notably, the price of gold, which had strengthened during the first few day of 2014, is pulling back today.

Technically, the S&P 500 Index staged a small pullback over the past few days, and may have been due for a bounce. “Buying on weakness” had been the over-riding theme of the market for much of 2013, and that behavior seems to be operating again today. Still, we will have to see if a clear direction emerges from here. For now, sentiment seems to be improving, as the VIX is lower by 4%, to just under 13. Notably, while trading volumes remain light, large firms should be resuming business now that the holidays are over, and that will likely play a key role.

Elsewhere, traders received just one major economic report this morning. Specifically, the nation’s trade gap narrowed to $34.3 billion in November, from $39.3 billion in October. On point, the current month’s reading was quite a bit better than many had expected. Elsewhere, the Senate has approved Janet Yellen’s nomination as head of the Federal Reserve. While the news had been widely anticipated, this development still may have some traders feeling bullish.

In corporate news, 3D Systems (DDD) stock is heading higher after the cutting-edge technology company announced a business deal with Intel (INTC). Elsewhere, Linkedin (LNKD) shares were off, but have recovered, after the social media company received a “Wall Street” downgrade. - 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 SurveyWe are still a few days away from the start of fourth-quarter earnings season. In the meantime, however, investors appeared pleased with November-period results from Sonic Corp. (SONC), and shares of the restaurant operator are up moderately ahead of the bell, as a result. Elsewhere, the stock of Convergys Corp. (CVG) is soaring in the premarket, after the provider of customer care and billing solutions agreed to acquire industry peer Stream Global Services for $820 million in cash. Convergys also reaffirmed its 2013 guidance. – 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 - For those bullish souls looking for a fast start to the new year on Wall Street, the first three sessions have been a bit disappointing, although not dramatically so, as the cumulative action has been just modestly to the downside following a year, which was not wanting in bullish fireworks. In fact, no fewer than 52 all-time record highs were set on the Dow Jones Industrial Average and 44 such peaks were established on the Standard and Poor's 500 Index.   

Thus far, though, there have been no new records set in 2014. Quite the contrary, the movement has been mostly to the downside. However, it is just three days, and there is no basis to even hint that the long bull market is at any risk, the stretched valuations notwithstanding. Even so, we do point out that Wall Street lore holds that the market's action for the first five trading days to a new year can be a forecasting tool for the year as a whole. Another mantra holds that the action for the entire month can be predictive. It is also interesting that the market's showing for the first three days of 2014 is the weakest since 2008, which, incidentally, was the last down year for the market. Still, it is too early on either score--five days or a full month--to draw any conclusions.  

Meanwhile, yesterday's market was a seesaw one, with the averages pressing downward throughout the morning, before making a half-hearted and ultimately unsuccessful recovery effort in the afternoon. All told, by the close, the red arrows prevailed, although not decisively so, with the Dow off 45 points, reflecting, in part, a last-minute selloff; the S&P 500 Index was down five points; and the NASDAQ was in the red by a more appreciable, on a percentage basis, 18 points. However, it was the S&P Mid-Cap 400 and the small-cap Russell 2000 that fared the worst, losing more than a half a percentage point each.

In part, we are seeing some overdue group rotation, where some sectors, which were rare losers last year, such as the gold miners, staging a slight comeback so far. On the other end, we have seen some very selective softening in the tech sector, with Microsoft (MSFT - Free Microsoft Stock Report) weighing on both the Dow and the NASDAQ yesterday, while some coal stocks, laggards in 2013, are continuing their descent so far in 2014. Yesterday, they were joined by the steels, which had been rebounding of late. So trading has clearly been uneven to start the new year.

As to influences, in addition to some constructive profit taking in a frothy stock market, we also are seeing some hesitation ahead of this Friday's all-important report on non-farm payrolls and the jobless rate. Such metrics can be market moving if there is a notable deviation from the consensus expectations, which are now centered on job growth in December of 190,000 and a jobless rate during that month of 7.0%, the same as in November. 

In more news, we have just gotten the Commerce Department's trade gap issuance for November, and the data showed that the deficit dropped sharply in November, tumbling from $39.33 billion to $34.25 billion. That was the lowest trade gap since October of 2009. This is not often a market moving report, nor does that seems to be the case today, as the futures, already up (see below), did not move on this news. Elsewhere, last night the Senate confirmed Janet Yellen as the next Fed Chair. The vote to confirm was 56 to 26 and was largely along party lines, and the up vote was fully expected. As to the markets today, they are higher thus far in Europe, after data showed that inflation had fallen below the European Central Bank's target in December. That could be a problem if prices start to actually fall and deflation fears rise. Equities also were mostly higher in Asia overnight. And on our shores, the S&P 500 Index futures are in the black by more than seven points, while the NASDAQ futures are pointing higher to the tune of almost 17 points. Such gains, and a better showing in the Dow futures as well, suggest a notably higher start to the new trading day when the action starts in less than an hour from now. - Harvey S. Katz

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