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After The Close - After a mixed start to the trading week, the bulls quickly regrouped this morning—though today’s rally did not include the mid- and small-cap stocks. There were a few factors working in the favor of the large-cap stocks today, including some encouraging corporate earnings reports, a slight improvement in China’s GDP, reaffirmation by Federal Reserve Chair Janet Yellen that the lead bank doesn’t intend to raise rates until at least early 2015, and a mostly positive summation of U.S. economic conditions in the Fed’s latest Beige Book report.

All of these aforementioned positive events pushed the major large-cap indexes higher in the latest session. At the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index were 78, 10, and eight higher, respectively. Overall, the buying was selective in the large-cap market. The spread between advancing and declining issues was mixed, with the former holding an edge on the Big Board and the decliners ahead on the NASDAQ, which was not the case for a good portion of session. Weakness in the healthcare sector likely weighed on the NASDAQ. In the large-cap area, the Dow hit an all-time high during the session and the S&P 500 Index finished on the doorstep of a record.

Given the aforementioned mostly constructive economic and earnings news, it should not come as a surprise that most of the major sectors finished nicely higher. Leadership came from some of the more economically sensitive sectors, including the energy, basic materials, and technology groups. We surmise that the improved economic data from China, a 0.2% rise in U.S. industrial production, and a favorable outlook in the Beige Book gave a boost to the basic materials and energy stocks. China is a huge consumer of oil and materials.

It also was another good day in a string of consecutive positive sessions for the telecommunications sector. Meantime, the technology group was led by several big name stocks, including Microsoft (MSFT - Free Microsfot Stock Report) and Intel (INTC - Free Intel Stock Report), the latter of which posted strong quarterly results after the market closed last night. Conversely, it was a disappointing day for those holding shares of consumer non-cyclical and healthcare companies. The consumer staples stocks were like hurt by data from the Labor Department showing a rise in producer (wholesale) prices last month.

On the earnings front, the number of reports has picked up markedly the last few days. In addition to Intel, we received good news from BlackRock (BLK), U.S. Bancorp (USB), CSX Corp. (CSX), and Abbott Laboratories (ABT) within the last 24 hours. On the other hand, the investment community did not like what it saw from Yahoo! (YHOO) and Bank of America (BAC) and penalized the shares of these big-name companies. Still, all in all, the earnings season, which is only just over one-week old, has so far been a constructive one for equities.

The equity market also was helped today by another round of M&A activity news. Specifically, Twenty-First Century Fox (FOXA) is showing deep interest in Time Warner (TWX), although it does not seem to mutual, at least for the moment. Still, the sentiment on Wall Street seems to be that these two companies, which have many of the same prominent shareholders, will continue to dance in the coming weeks. Meantime, International Game Technology (IGT) did agree to be acquired by Italy-based GTech for a combination of cash and stock totaling roughly $4.7 billion. As we have noted here in the past, investors usually view such activity as a sign of a strong market, and that certainly seemed to be the case once again today. – William Ferguson

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

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12:30 PM EDT - The U.S. stock market got off to a strong start this morning, but has since pulled back quite a bit. At just past noon in New York, the Dow Jones Industrial Average is up 58 points; the broader S&P 500 Index is ahead six points; and the NASDAQ is tacking on 15 points. There is a mixed quality to today’s session, as rising issues are about even with decliners on the NYSE. Nonetheless, most of the market sectors are making progress, which is a positive indicator. There is leadership in the energy and basic materials names. In contrast, the healthcare and utility stocks are a bit weak. The smaller caps are selling off, too.

In general, the stock market has been quite volatile, but has remained resilient. While many traders and media commentators have expressed concerns about the market’s direction, a substantial pullback has yet to present itself. Ultimately, the bulls have repeatedly stepped in to support equities, whenever the market has weakened. This may be the most important factor to watch at this point. For as long as this behavior continues, the stock market rally will likely remain intact.

Today’s economic news was somewhat mixed. Specifically, producer prices increased 0.4% in June, which was a larger advance than had been anticipated. Much of the increase reflected higher energy prices, and may not suggest that wider inflationary pressures are at work. Too, industrial production increased 0.2% in June, which was a bit lower than some had expected. Later today, the Federal Reserve will release its Beige Book summation. Notably, some traders may be cautious about taking a position before that release.

Finally, the second-quarter corporate reports are starting to stream in with some force. We have recently heard from some high profile names. In the technology sector, investors were pleased with the news from Intel (INTC - Free Intel Stock Report). With today’s move higher, that issue is now close to $34 a share and has come a long way from its 52-week low of about $22. Things did not go as well for Yahoo! (YHOO). That stock is slipping after the Internet company issued disappointing results. In the financial area, BlackRock (BLK) issued a good release, and those shares are up in response. - Adam Rosner

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

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Stocks to Watch from The Survey – The pace of second-quarter earnings releases is starting to pick up, with the most recent slate highlighted by chipmaker and Dow-30 component Intel (INTCFree Intel Stock Report). The company delivered sales and earnings that topped investors’ expectations, in addition to adding $20 billion to its share-repurchase authorization. INTC is moving nicely higher ahead of the bell, as a result. Other stocks moving higher in the premarket on earnings news include financial services companies BlackRock (BLK) and U.S. Bancorp (USB), medical supplies company Abbott Laboratories (ABT), and diversified manufacturer Textron (TXT). On the other hand, updated financials and/or outlooks from Internet company Yahoo! (YHOO), banks PNC Financial Services (PNC) and Bank of America (BAC), and aerospace/defense company AAR Corp. (AIR) were not as well received on Wall Street, and these issues are indicating lower openings this morning, as a result.

There are also significant developments on the M&A front. Indeed, shares of Time Warner (TWX) are soaring ahead of the bell, after the media and entertainment conglomerate received, and subsequently rejected, a buyout offer from industry peer Twenty-First Century Fox (FOXA) said to be worth some $85 a share, or roughly $80 billion. FOXA stock is little changed on the news. Shares of International Game Technology (IGT) are also indicating a sharply higher opening this morning, after the manufacturer of slot machines and related software agreed to be acquired by Italy-based GTech for $4.7 billion in cash and stock ($6.4 billion including debt).   – Matthew E. Spencer

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

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Before The Bell - The stock market, fresh off of Monday's clear win, started the trading day yesterday again somewhat to the upside. In fact, early on, the 30-stock Dow Jones Industrial Average had climbed to an all-time intraday high of 17,120. That 75-point gain was matched by modest advances in the other large-cap indexes, namely the Standard and Poor's 500 Index and the tech-heavy NASDAQ.

Those good feelings and the extension of Monday's rally did not last, however. True, the news largely remained supportive, as the Commerce Department reported early in the day that retail sales had risen modestly in June, gaining 0.2%, which was somewhat below expectations. However, once we exclude the auto component (such sales dipped last month) for the mix, we see that the increase was a more formidable 0.4%. That uptick came on the heels of an upwardly revised increase of 0.5% in total sales in May. Also, a trio of Dow-30 components reported upbeat financial metrics to start the day.

So, all of the planets seemed to be aligned for the bulls. However, Federal Reserve Chair Janet Yellen came along, and in testimony before Congress later in the morning intoned that while she remained on board with her prior commitment to near-zero policy rates, she added that the bank could move sooner to hike borrowing costs than generally assumed should the economic data continue to surprise on the upside.     

Such a mildly bearish interest-rate posture along with comments that there was a bit more risk in the stock market now, especially among the small-cap sector, was all that the market participants needed to hear, and stocks immediately gave back their gains, and, in fact, the key averages fell quickly into the red. By late morning, the Dow had fallen to an intraday loss of more than 50 points, while the NASDAQ had plunged to a similar deficit, though in the latter case that represented more than a 1% drop. However, it is hard to keep the bulls down, and after that mid-session reversal, the bears ran out of steam and the losses were pared back. Indeed, by early afternoon, the Dow had jumped back into the black, while the NASDAQ had materially trimmed its earlier declines. It seems that the optimism regarding earnings has, for now, at least, overcome the uneasiness about interest rates and the Fed.  

Encouragingly for the bulls, this partial restoration of the earlier optimism was not dampened much into the close, so that while stocks didn't rally any further, the temptation to unload positions aggressively did not return, either. All told, by the close, the Dow had managed a slight five-point gain. However, the other equity averages were still in the red, albeit much less so than earlier in the day, while the advance-decline ratio for both the Big Board and the NASDAQ were clearly negative. Most of the 10 market groups, meantime, finished lower, with the notable exceptions of the telecom stocks, the financials, and the utility sector. All in all, it was a weak day, but nowhere near as troubling as the mid-session trends seemed to presage.

Then after the close, giant semiconductor maker and Dow-30 component Intel (INTC - Free Intel Stock Report) posted its second-quarter results and beat on both the top-and-bottom lines. The company also guided higher than many had been forecasting for the third quarter. The initial read among investors was positive, and the stock rallied nicely in the after market. That uptick is continuing, with some additional enthusiasm in the pre-market hours this morning.

Looking at the markets, in general, as we start the new day, we find that stocks in Asia were mixed overnight, but with generally minimal movement. In Europe, however, the bourses are tracking somewhat higher, emboldened, no doubt, by the partial recovery on Wall Street yesterday and some relief that the latest quarterly GDP figures in China were reassuring, with growth there coming in at a vigorous 7.5%. Meanwhile, stateside, the futures are climbing so far this morning, with the S&P 500 Index futures up more than seven points and with the NASDAQ futures ahead by some 25 points. A number of tech stocks, in response, are rising in the pre-market, presaging a strong opening for Wall Street when trading gets going in less than an hour from now.

From here, our sense is that data on industrial production, due out at 9:15 (EDT) this morning, and the Federal Reserve's economic summary, known as the Beige Book, due out at 2:00 (EDT) this afternoon will have a lot to say about whether or not the market will fulfill its early promise. Finally, Janet Yellen, who testified before the Senate yesterday, to rather mixed reviews, will shortly do so before the House of Representatives. That testimony could also dictate how the market fares, along with the steady stream of corporate earnings. Stay tuned.   - Harvey S. Katz 
   

At the time of this article’s writing, the author held positions in one or more of the companies mentioned.