After The Close - The bears were in charge on Wall Street today after ominous overseas events took center stage, causing stocks to fall sharply in late afternoon trading. At the closing bell, the Dow Jones Industrial Average and the S&P 500 were off 161 points and 23 points, respectively. Even harder hit on a percentage basis was the tech-heavy NASDAQ, down 63 points. Not surprisingly, market breadth was deeply negative, with falling issues topping those rising by a wide margin on both the New York Stock Exchange and the NASDAQ.

The day started out with misgivings as deeper United States sanctions targeted Russia’s defense firms. U.S. companies are now barred from doing business with manufacturers, such as Kalishnikov, maker of the iconic AK-47. The move pressured European stocks and the futures market here before trading began.

Then around midday came word that a Malaysian airliner had crashed in eastern Ukraine, near where fighting has been occurring between the government and rebels. That development on the surface seemed more than coincidence, and pushed investors to turn cautious, since it could make an already dangerous situation that much more problematic.    

Stocks were unable to recover from the one-two punch of disturbing international events, and traders headed into hard assets, including gold and oil, as well as government bonds. Indeed, the yield on the 10-year Treasury note fell from 2.53% to 2.46%, or a rate that few would have predicted at the beginning of the year, after the economy had performed well in the second half of 2013.

As for today’s economic news, there was a bit of a mixed tone, although the overall trend still seemed to point higher. Data on the labor market showed further declines in initial weekly unemployment claims. That supports the improvement in the job market that has helped to push stocks moderately higher this year. But statistics related to housing market fell somewhat shy of estimates and the prior month’s tallies, even though they indicated year-to-year progress.

As for the corporate earnings season now under way, there have been enough positive reports to keep the bulls engaged, even as shares of companies falling short of projections or offering up weak guidance are punished. But heading into this evening and quite likely tomorrow morning, the focus may well remain on Ukraine and what happened to bring about the tragic plane crash. - Robert Mitkowski

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 trading lower today, and has been unable to reverse course, so far. At just past noon in New York, the Dow Jones Industrial Average is off 60 points, after having been off 90 points a few minutes earlier; the broader S&P 500 Index is down 12 points; and the NASDAQ, which is leading the averages lower, is down 36 points. Market breadth is unfavorable, with declining stocks ahead of advancers on the NYSE. Furthermore, all of the market sectors are trading in negative territory. There is pronounced weakness in the energy group. Also, the technology sector is losing ground, with sharp losses in the semiconductor names. Specifically, the Philadelphia Semiconductor Index (SOX) is off almost 2% today. While there is no real strength in the market, some of the consumer names are showing some relative outperformance.

Over the past week, it seems the broader stock market has been struggling to press higher. Notably, while the larger names have been faring well, the small cap stocks, and some technology issues, have been encountering some resistance. This may be due to the fact that equities already staged a large run in May and June, and traders needed a chance to digest these gains. Too, the second-quarter earnings season has now arrived. As companies issue their figures, as well as provide renewed guidance, many investors will likely be re-evaluating their holdings. We may see some profit taking, as well as sector rotation, as a result.

Traders received a batch of mixed economic reports this morning. The employment situation continued to show improvement. Notably, initial jobless claims for the week ended July 12th, dipped to 302,000, which was a bit lower than had been expected. Weekly continuing jobless claims also declined a bit. However, the housing market recovery seems to be somewhat choppy. Housing starts for the month of June came in at 893,000 units, annualized, falling short of the consensus view. Building permits were also a bit light. Elsewhere, the economy in the Philadelphia region picked up in July, as the Philadelphia Fed Survey came in well ahead of expectations for the month.

Finally, traders received news from a number of corporations today. In the Dow, shares of UnitedHealth Group (UNH - Free UnitedHealth Group Stock Report) are trading higher, after that company put out a strong report. In the financial sector, Morgan Stanley (MS) shares were up, but have since pulled back, after the industry leader released encouraging data. In other areas, things did not go well for Yum! Brands (YUM). That issue is trading lower, as investors were disappointed with that company’s issuance. - 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 – Earnings are keeping investors on their toes again today. There were a number of companies that reported disappointing results and/or outlooks, helping to push equity futures lower ahead of the bell. Most notable were releases from memory chip manufacturer SanDisk (SNDK), toy maker Mattel (MAT), and vehicle retailer AutoNation (AN), none of which sat well with investors, who have bid all three stocks materially lower in the premarket. Shares of restaurant operator Yum! Brands (YUM), pipeline MLP Kinder Morgan Energy Partners (KMP), and casino operator Las Vegas Sands (LVS) are indicating lower openings this morning on earnings news, as well, albeit to a more moderate extent.

It was not all bad news, however, and shares of health insurer and Dow-30 component UnitedHealth Group (UNH Free UnitedHealth Stock Report), investment bank Morgan Stanley (MS), online auctioneer eBay (EBAY), tobacco company Philip Morris International (PM), paint manufacturer and retailer Sherwin-Williams (SHW), private-equity firm The BlackStone Group (BX), and equipment rental company United Rentals (URI) are all up in the premarket after releasing quarterly financials.

Elsewhere, shares of Dresser-Rand Group (DRC) are surging ahead of the bell, after news reports broke that German-based industrial conglomerate Siemens (SIEGY) may be looking to acquire the maker of rotating equipment for oil, gas, and petrochemical companies. Finally, software giant Microsoft (MSFT Free Microsoft Stock Report) has announced plans to cut 18,000 jobs over the next year. Management expects to book restructuring charges of $1.1 billion to $1.6 billion related to the headcount reduction. Investors appear pleased with the strategy, as MSFT is indicating a moderately higher opening this morning. – 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 stock market got off to another rousing start yesterday, the second in the past three sessions. However, unlike the case on Monday, when equities kept up the momentum throughout, stocks wilted later in the morning and moved to a somewhat defensive position as the noon hour rolled along on the East Coast. But then, as if on cue, the market seemed to get a second wind and the averages resumed their climb, led by blue-chip laden Dow Jones Industrial Average, which rose further into all-time record-high territory above 17,100.

Behind the resumption of the buying early yesterday, following a dip on Tuesday, was optimism about second-quarter earnings, as a number of large corporations put forth better-than-expected quarterly metrics and guided in a positive manner for the upcoming three months. In this group, was Intel (INTC - Free Intel Stock Report), the giant semiconductor maker and Dow-30 component, which tallied better results and raised expectations for the current period. That stock, a strong performer so far this year, added nicely to its 2014 gains, as it gained almost three points (or more than 9%), making another 52-week high in the process. In fact, that stock actually reached its best levels in a decade. Other tech stalwarts on the Dow climbing higher yesterday were IBM (IBM - Free IBM Stock Report), and software maker Microsoft (MSFT - Free Microsoft Stock Report). A pickup in merger and acquisition activity also helped to underpin the early market strength, as has been the case recently. And the good news continues so far this morning. In fact, even in some cases when earnings have missed their targets, companies have at times beaten on the revenue line or guided higher going forward. It has been that kind of reporting season thus far.

Yet, for all that, we saw that there were less-compelling moves being made among the small-cap biotech stocks and some of the Internet names. In response, the Standard & Poor's Mid-Cap 400 and the small-cap Russell 2000 tracked in and out of the black all day, finally settling in with small aggregate losses. Things went notably better in the large-cap arena, though, as the Dow, led by strength on the tech side, added 78 points; the Standard and Poor's 500 Index climbed eight points; and the NASDAQ was positive to the tune of 10 points. Bonds also firmed, as yields dipped modestly.

Also influencing the market in a modest way was the economy. Here, before trading commenced, a pair of key reports was issued. At 8:30 (EDT), the Commerce Department observed that the Producer Price Index had climbed by 0.4% in June, versus a decline of 0.2% in May. The big swing factor was a surge in oil prices. Then, just moments before the stock market opened, the Commerce Department reported that industrial production had risen by 0.2% last month, while factory utilization had leveled off at 79.1% of capacity. Now, those two reports were somewhat softer than expected; however, they still affirmed that business activity was continuing at a high level, suggesting that GDP likely gained about 3% in the recently ended June quarter.

Then, at 2:00 PM (EDT), the Federal Reserve issued its Beige Book summation of economic conditions across the country. Surprises were few, as were disappointments, and the market steadied, holding near the best levels of the day over the final two hours. It seems that most of the Fed Districts were noting modest to moderate growth, as the long business expansion continues to proceed in durable fashion.

The solid close, encouraging tone of the earnings results thus far, the generally benign news on the economy, and few signals that the Fed will do anything more than speculate on a step up in the date for starting to raise short-term interest rates, all argue in favor of the stock market continuing its advance in the weeks and months to come. Still, the high level of valuations suggests that most things will continue to have to go right to sustain the advance. Unfortunately, on the global front that is not the case currently, as the fighting in the Middle East drones on, while tensions between the United States and Russia are again on the rise, with the sanctions being levied on the latter taking a large chunk out of its stock market thus far today.

Not surprisingly, the new day begins with stocks having traded generally lower across in Asia overnight, while in Europe, the major bourses are tracking sharply lower. Those ills, meantime, have spread to our country, pushing the equity futures here notably in the red so far. All told, the S&P 500 Index futures are off by 10 points, while the NASDAQ futures are in the red to the tune of more than 22 points, presaging a meaningfully weaker market at the start of the trading day in less than an hour from now. - Harvey S. Katz, CFA

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