After The Close - The second half of 2014 got off to a solid start for those long equities. After several lackluster sessions to close out the first six months, the bulls made a statement today, emboldened by strong manufacturing data both here and abroad (more below). At the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index were up 129, 50, and 13 points, respectively, with the broader S&P 500 setting an all-time high in the process and the Dow 30 moving onto the doorstep of the psychologically significant 17,000 mark. The buying was broadbased, with both large- and small-cap equities notably higher. Advancing issues led decliners by a sizable margin on both the Big Board and the NASDAQ.

Not surprisingly, nearly all of the top-10 sectors were notably higher today, with the only holdout being the defensive utilities. Once again leadership came from the recently red-hot technology stocks. In the technology space, the stocks of the industry heavyweights, including Apple (AAPL), Google (GOOG), and Netflix (NFLX), all finished higher, along with social media giants Facebook (FB) and Twitter (TWTR). However, unlike yesterday, the technology sector had company in positive territory, with strong gains recorded by the healthcare, basic materials, industrial, and consumer discretionary groups. The healthcare stocks got a nice boost from shares of Regeneron Pharmaceuticals (REGN), which rose sharply on reports that French drugmaking giant Sanofi (SNY) had increased its stake in the company. Overall, there was much to like from a sector perspective.

As noted, the market got a significant boost today from favorable economic data. Specifically, the Institute for Supply Management, a Tempe, Arizona-based trade group, reported that manufacturing activity expanded for the 13th straight month in June and it was the second-highest reading in 2014. This, along with news overnight that manufacturing activity in China grew in June for the first time in six months, gave a nice jolt to the worldwide equity indexes. Investors viewed the U.S. and China manufacturing reports as a sign of a broadbased economic growth.

Looking ahead, we will get a few more very important reports from the business beat in this holiday-shortened trading week, including data on non-manufacturing activity and employment. Both of those issuances have the potential of being game changers for equities, much like today’s manufacturing data.

Meantime, the situation overseas, particularly the situations in Iraq and Ukraine, although far from reassuring, have not caused any additional anxiety for investors the last few days. While this situation can change on a dime, investors took some comfort in recent reports that the oil-producing operations in Iraq are secure and that there have been no disruptions of note to date. We think this is a big reason why crude oil prices fell on the New York Mercantile Exchange today despite the aforementioned pickup in global manufacturing activity. Normally such data would lead to a spike in crude prices, but that was not the case today.

Conversely, the growing appetite for risk today—the S&P 500 Volatility Index (or VIX) ended the session just above 11—was not good news for bonds. In fact, the yield on the benchmark 10-year Treasury note, which moves in the opposite direction to the price, rose five basis points, to 2.56%. We think this weighed on the performance of the higher-yielding utilities, which are less attractive to income-oriented investors when fixed-income yields are on the rise. – William Ferguson

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


12:30 PM EDT - The U.S. stock market is pressing sharply higher today, as we begin the second half of 2014. Indeed, so far, the bulls have been able to maintain their buying campaign into the early afternoon, which is likely a positive indication. At just past noon in New York, the Dow Jones Industrial Average is up 129 points; the broader S&P 500 Index is up 13 points; and the NASDAQ, which is leading the averages higher, is rising by 50 points. Market breadth is decidedly favorable, as advancing stocks are beating out decliners by about 3 to 1 on the NYSE. For some perspective, there are now 284 stocks hitting new highs, versus only five at new lows on the NYSE. This certainly suggests that there is some strength to be found in this market. Almost all of the equity sectors are making progress, with notable gains in the healthcare and financial names. Meanwhile, the utilities are the only group that is slipping today, as traders are likely re-allocating their resources to the high-flying stocks.

Technically, stocks are back at key levels. Notably, the Dow is now testing the 17,000 area again. Further, the S&P 500 Index is breaking out of its trading range and is not too far from the 2,000 level. Meanwhile, yesterday the NASDAQ broke through 4,400, and is moving sharply higher. Notably, this index was at 5,100 in March of 2000, fueled by a speculative technology bubble.

Meanwhile, traders looked past some decent, but not exceptional, economic news this morning. Specifically, the ISM Index came in at 55.3 in June. This reading was in line with May, but just short of expectations. Elsewhere, construction spending increased 0.1% in May. Economists had been looking for a bit better reading. For the rest of the week, the employment situation will likely be the center of attention. Tomorrow, we get a look at the ADP Employment Change figures for the month of June. On Thursday, we will receive the weekly jobless claims data, as well as the government’s employment report for the month of June. The market will be closing early on Thursday, and won’t be open on Friday, making this a short trading week.

Elsewhere, the earnings news has been minimal today. Nonetheless, Paychex (PAYX) a leading payroll processor, is set to issue its results after the closing bell today. That stock is up a bit. Investors may be optimistic about the upcoming second-quarter earnings season, and they may even be moving into stocks attempting to get a quick lift. - 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 It is another very light day for corporate news. Nonetheless, automakers will likely be in the spotlight, as companies such as Ford (F) and General Motors (GM) are scheduled to release U.S. sales figures for the month of June this morning. Elsewhere, Hormel (HRL), a manufacturer of meat and other packaged foods, has agreed to acquire CytoSport, the maker of Muscle Milk and other nutritional products for fitness buffs, for $450 million. Finally, shares of Hewlett-Packard (HPQ) are up slightly ahead of the bell, after the computer company settled a lawsuit related to its purchase of software developer Autonomy. – 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 - A listless, but narrowly better, first half on Wall Street drew to a close yesterday, and for the most part, the directionless aggregate trading pattern that had been in place for much of that six month-span again prevailed in the latest session. Overall, the market treaded water, with the Dow Jones Industrial Average and the Standard and Poor's 500 Index giving a little ground, while the NASDAQ tracked nicely higher, as did the small- and mid-cap indexes. Advancing stocks also led decliners on both the Big Board and the tech-laden NASDAQ.

As noted, the equity market managed to essentially march in place yesterday after having been higher for a brief span during the mid-afternoon. This unprepossessing performance, which closed out the six months, allowed the major averages to wind up in the black for both the second quarter and the opening half. It was anything but a compelling six months, however.

The latest showing, which, as noted, was highlighted by a gain in the NASDAQ and encouraging performances by the small-cap Russell 2000 and the Standard and Poor's Mid-Cap 400, helped to lift these three averages further into the plus column for the six months. The Dow, albeit lower on the final day of June, still was able to post a year-to-date advance for the half albeit totaling an unimposing 1.5%. The mixed showing yesterday likely reflected some window dressing on the last day of the half. That is often a pattern of the end of a quarter.

In all, the Dow gained 1.5% for the half, making it among the poorest performers during this span, while the Standard and Poor's 500 Index added 6.1% and the NASDAQ climbed 5.5%. These three composites are the most widely followed trio of equity indexes on Wall Street. The interest-rate-sensitive Dow Utilities, meanwhile, climbed a notable 17.4% during the half. 

As to the half's concluding session, it was notable for a paucity of economic news, save for a report indicating regional strength in manufacturing and better pending home sales. But that comparative news vacuum will end directly, as we will be getting closely tracked data from the Institute for Supply Management (ISM) later this morning. That manufacturing survey is expected to show a further advance in June. We also will be getting reports on auto sales for the latest month and data on construction spending for May. Then, tomorrow, we are due to get a report on May factory orders. The holiday shortened week then concludes on Thursday with several issuances, starting with the month's most closely tracked report, when the U.S. Labor Department releases its survey on non-farm payrolls and the jobless rate. Also that day, we are scheduled to get reports on the trade gap and non-manufacturing activity, likewise from the ISM. The employment data, as is the case with the manufacturing report and the non-manufacturing survey, can all be market movers.  

Regarding the stock market, it was a decent, but not exceptional, first half. However, given the poor initial-quarter showing by the economy, in which a weather-encumbered first few months directly led to an opening-quarter GDP contraction of 2.9%, and the well-chronicled ills overseas, it was a reasonably good six months for Wall Street. That is all the more so given the near-record levels for much of the market--especially the Dow and the S&P--and the elevated rates of capitalization still present.    

Now, looking ahead to the new day, we find that the markets were largely higher in Asia overnight, once more being led by Japan's Nikkei. Stocks in Asia benefited from a good purchasing managers' survey in China. At the same time, the bourses in Europe are generally tracking higher thus far this morning. As to our markets, the futures are also pointing nicely higher at this time, pushed forward to the tune of more than four points in the S&P 500 Index futures and almost a dozen points in the NASDAQ. In addition to the equity averages, the oil futures are up modestly, while gold, a strong performer recently, is again climbing this morning, as are interest rates, with the yield on the benchmark 10-year Treasury note at 2.5
5%.   - Harvey S. Katz

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