After The Close - The middle day of the trading week proved to be an uneven session on Wall Street, though trading did have a bearish undertone for much of the day. The Dow Jones Industrial Average traded lower throughout the day, with the stocks of most of the blue-chip companies in the red, but the tech-heavy NASDAQ, helped, in large part, from a positive showings from the technology and healthcare sectors, was stronger for much of the day and withstood a late move from the bears to end in the plus column. As to the broader S&P 500 Index and the small-cap Russell 2000, both averages witnessed a slight pickup in selling late in the session, though each finished not too far removed from the neutral line. Overall, declining issues led advancers on both the New York Stock Exchange and the NASDAQ, with the spread more pronounced on the Big Board.

The story once again appeared to be some sector rotation, specifically among the 10 major groups. Of note, was some movement out of the higher-yielding consumer staples, telecommunications, and utilities groups. A strong labor report and the minutes from the Fed’s last monetary policy meeting (more on both topics below) pushed bonds lower. The accompanying rise in yields on fixed-income securities makes such instruments, which are by nature less risky, attractive options for accounts stressing income and was most likely behind today’s selective selling of higher-yielding equities. Likewise, it was not a good day for those long energy stocks, as most of the oil-related stocks were weaker on a continued retreat in crude prices on the New York Mercantile Exchange.

However, one sector that deserves highlighting is healthcare. The defensive-oriented group, which is up more than 40% over the last 52 weeks, once again showed leadership today. Within the space, shares of ArthroCare (ARTC) and Forest Laboratories (FRX) climbed notably. The strong performance of the healthcare stocks—save for the managed care providers—along with a decent showing in the technology sector were the main reasons for the NASDAQ’s relative outperformance in the latest session. In the technology area, the semiconductor stocks moved higher on the strength of a good quarterly showing from Micron (MU). The basic materials and energy stocks also rallied in the final half hour of trading.

The jumped in bond yields—the rate of the benchmark 10-year Treasury climbed to 2.99% in the latest session—is not all that surprising. A stronger-than-expected report from Automatic Data Processing (ADP) that showed 238,000 private-sectors jobs were created in December, along with minutes showing that many Federal Reserve officials now think the labor market is displaying enough improvement for the central bank to gradually cut back on its bond buying, pushed rates higher. (Investors should note that the much-anticipated report on December nonfarm payrolls is due this Friday.) The job creation data will be highly scrutinized when the lead bank revisits the scope of monthly asset purchases at its two days that commence on January 28th. That FOMC meeting will also mark the first monetary policy meeting under the leadership of newly confirmed Fed Chair Janet Yellen, a noted dove. That situation bears watching, as a tightening of monetary policies has historically not been greeted kindly by market participants. Our sense is that such sentiment may have weighed on equities in the final few hours of today’s session. - 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 putting in a mixed performance today, following a strong session yesterday. At past noon in New York, the Dow Jones Industrial Average is off 59 points; the broader S&P 500 Index is up one point; but, the technology-heavy NASDAQ is higher by about 17 points. Market breadth confirms an uneven showing, too, as declining issues are ahead of advancers on the NYSE. However, the figures look a bit more encouraging on the NASDAQ.

The market sectors are largely divided. There is some leadership in the healthcare names, with gains in the biotechnology issues. The technology sector is also making a push higher, as some semiconductor stocks are advancing. However, there is weakness in the energy group, due to losses in the distribution names. Some consumer issues are lower, too.

Technically, the S&P 500 Index managed to rally a bit yesterday, showing some strength on the part of the bulls. Nonetheless, we will have to see further buying from here and that may be harder to produce. Upcoming catalysts that could push the market higher might come from better-than-expected economic data both in the U.S. and abroad, large upside revisions to corporate earnings, and limited action by the Fed.

Elsewhere, traders received some decent economic news this morning. Specifically, ADP’s Employment Change report showed 238,000 jobs were added to the private sector in December, which was better than had been anticipated, and also well ahead of the 215,000 figure logged in November. Meanwhile, traders are likely awaiting this afternoon’s release of the minutes from the FOMC’s December meeting. With the ongoing concerns about the Fed’s stance and the pace at which it will taper its asset purchases, this release will likely be carefully dissected by Wall Street.

In the corporate arena, the news has been mixed. Micron (MU) shares are up sharply after the semiconductor manufacturer delivered healthy quarterly results. Further, shares of Monsanto (MON) and Constellation Brands (STZ) are up on favorable releases. However, things did not go as well for The Container Store (TCS). That stock is heading lower, as investors were unimpressed with the company’s guidance. Meanwhile, traders received a bit of M&A news. Specifically, Forest Labs (FRX) stock is rising, after that company announced that it is making an acquisition.  After the close today, we will hear from Bed Bath and Beyond (BBBY). - 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 is some earnings news to be aware of today. Notably, shares of semiconductor manufacturer Micron Technology (MU), wine, beer, and spirits company Constellation Brands (STZ), and University of Phoenix parent Apollo Group (APOL) are all up nicely ahead of the bell after reporting November-period results. In other news, the stock of Forest Laboratories (FRX) is also indicating a sharply higher opening this morning, after the drugmaker agreed to pay roughly $2.9 billion to acquire industry peer Aptalis Holdings. Also on the M&A front, rumors are swirling that restaurant operator CEC Entertainment (CEC), which owns Chuck E. Cheese, may be looking to put itself on the auction block. – 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 bulls, chastened a bit by a modest three-day backing off in the stock market, came back to life yesterday, and in reasonably good fashion, posting a wire-to-wire win, and ending the session with healthy gains in the major indexes.

Helping the market, which saw the Dow Jones Industrial Average jump by 106 points; the Standard and Poor's 500 Index add 11 points; and the tech-laden NASDAQ push ahead by 40 points, were data showing a notable improvement in our international trade gap, which was issued before the market opened. Of note, the deficit narrowed from a downwardly revised $39.3 billion in October to $34.3 billion in November. A flattish trade imbalance had been the general forecast.

To be sure, the trade metrics are rarely market moving, being well down the list of pivotal monthly reports out of Washington. And there probably was not a big boost given to stocks by this report. However, when one adds in the better performances in Asia and Europe that had preceded yesterday's open on our shores, along with the Senate confirmation of acknowledged monetary dove, Janet Yellen to chair the Federal Reserve, which took place on Monday night, the mood was decidedly better than it had been at the start of the new year. Thus, stocks got an early lift and carried the gains into the afternoon, finally finishing the session nearer to their session highs than not.

As to the market, there was broad-based strength during much of the day, save for a partial, and brief, early afternoon pullback, which had been occasion, we believe, by comments from John Williams, the President of the San Francisco Fed, who intoned that should the economy press forward nicely as now forecast, the central bank would likely continue to taper its bond buying and eventually end such popular purchases later this year. Save for that slightly discordant note, which was no big surprise, and softness in the basic materials and mining stocks, which gave back some recent gains on lower metals prices and some logical concerns ahead of the upcoming start of fourth-quarter earnings reporting season, the equity market acquitted itself rather well yesterday, as it ended its mini-slump. Meanwhile, reporting season, a four times-a-year event, is due to get under way in just a few days. On balance, most traders and investors look for a decent, but not eye-catching performance, and we do note that there have been many profit warnings to date, which is not confidence building. However, the pattern has been for companies to warn and then outperform those more modest forecasts. We shall soon see if this is the pattern once again. Anything less than such a decent outcome could prompt a renewal of the very recent selling.

As to other influences, there will undoubtedly be skittishness ahead of Friday's report on non-farm payrolls and the unemployment rate for December. That survey, which is prepared by the Labor Department, is set to be released on Friday morning, and it will follow, by 24 hours, the weekly release by that same governmental agency on first-time and continuing jobless claims. This report is also of some interest, especially on the week the monthly survey is released. Moreover, as earnings data is still sparse this week, such metrics will get a full-fledged review. Finally, just moments ago, a survey on private-sector job creation affirmed that 238,000 new payrolls were added last month, some 23,000 above expectations.

Otherwise, there seems little of note about to seriously take the measure of the triumphant bulls at this time, the ever-richer equity valuations aside. As for the day ahead, many traders will be paying close attention to the market's behavior today, as this is the fifth trading day of the year, and after three losses and again yesterday, the first-five-day results are now up in the air. Our thinking is that the bulls will make a run at posting a cumulative five-day advance, and recent behavior would have to give these perennial optimists the edge, although they start the four days a bit behind. 

Summing it all up, after a mixed showing in Asia overnight and a modest pullback in Europe so far this morning, our equity futures are pressing a bit lower with about an hour to go before the start of the new trading day. To wit, the Standard and Poor's 500 Index futures are off by almost three points, while the NASDAQ futures are down by a point. Bond yields, meantime, are rising, most likely in response to the better employment metrics cited above.   

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