After The Close - After two losing sessions to begin the trading week, the bulls regrouped today. The major equity indexes started the session to the upside, as sentiment improved on a strong earnings report from Alcoa (AA) after the close of trading yesterday, then hit a lull around the midday hour on the East Coast, but following the release of the minutes from the FOMC meeting at 2:00 P.M. (EDT) the major averages got a second wind and showed some renewed selective strength. At the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index were 79, 28, and nine higher, respectively.

Still, although the equity market’s gain was encouraging, it was not a clearly convincing win for the bulls. Overall, the spread between advancing and declining issues on both the New York Stock Exchange and the NASDAQ, though positive, was nowhere near as pronounced as the last two days when the bears were in control of trading. Too, the gains for broader mid- and small-cap indexes were modest.

From a sector perspective, it was all up arrows among the top-10 groups, with the only relative underperformer being the more-defensive utilities issues. Leadership throughout the session came from telecommunications, consumer discretionary, healthcare, and technology sectors, with the gains in those areas widening after the Federal Reserve minutes were made public. The basic materials stocks also were nicely higher, helped by the aforementioned good news from Alcoa.

The day’s biggest event was the release of the minutes from the Federal Reserve’s monetary policy meeting in June. The release revealed no surprises, which the market seemed to like. Specifically, the minutes showed that Fed officials are still in agreement that the central bank’s bond-buying program will end in October, and that rates will remain low for a “considerable time” after the bond purchases end. The document also showed that there are differing views on what might be the best way to signal the financial markets when they might raise the key short-term interest rates. The Federal Reserve’s accommodative monetary policies have been a big reason for the long bull market in place, and could be remain so into 2015 when a decision to raise rates may finally materialize. That said …

With the Federal Reserve talk on the back burner until the central bank meets again at the end of this month, we expect the investment community’s attention to turn to the second-quarter earnings season, which started last night, but does not really kick into gear until next week when banking giant and Dow-30 component JPMorgan Chase (JPM - Free JPMorgan Stock Report) releases quarterly results on July 15th. As noted, the period got off to a good start last night when former Dow-30 component and aluminum maker Alcoa reported better-than-expected bottom-line results. The consensus calls for earnings growth of more than 6% for the S&P 500 companies. If those expectations are met, and the news from the business beat continues to cooperate, the market has the potential to move higher. This is against the backdrop of a still very accommodative lead bank, which has made for very few attractive investment alternatives to equities these days. – William Ferguson

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


12:00 PM EDT - The U.S. stock market is putting in a choppy, but constructive, session today. After opening higher, then pulling back in the first hour of trading, the major averages are now drifting modestly higher again. At just noon in New York, the Dow Jones Industrial Average is up 26 points; the broader S&P 500 Index is ahead four points; and the NASDAQ is advancing 14 points. Meanwhile, advancing issues are just ahead of decliners on the NYSE, indicating a somewhat mixed market performance today. Leadership can be found in the basic materials group. In addition, some of the consumer names are making strides. In contrast, the utilities are an area of weakness. Some of the industrial names are a bit sluggish, too.

Stocks have pulled back slightly over the past couple of days. Although, that selling occurred on moderate trading volume, and the market remained quite orderly. From here, it remains to be seen if the bulls can push equities higher without hitting further resistance. The second-quarter earnings season has just begun, and that may provide the needed catalyst for another advance. However it should be noted that expectations have been running quite high, and it may be difficult for corporations to impress analysts and traders.

Meanwhile, we received no major economic reports this morning. However, at 2:00 PM (EDT), the FOMC is scheduled to release the minutes from its June meeting. This pending item may be contributing to the day’s somewhat tentative tone. Tomorrow, will be a busier day for reports. Specifically, the unemployment situation returns to the spotlight, as we get a look at the weekly initial and continuing jobless claims. Wholesale inventories for the month of the month of May are also due out.

Finally, the second-quarter earnings reports are now starting to stream in. Yesterday after the closing bell, Alcoa (AA) posted better-than-expected sales and profits, while offering an encouraging outlook. That stock is up more than 4% today. Things did not go as well for TheContainer Store (TCS). Those shares are off sharply, after the retailer put out a disappointing release. Later today, we hear from WD-40 Company (WDFC). Adam Rosner

At the time of this article’s writing, the author had a position in Alcoa.


Stocks to Watch from The SurveySecond-quarter earnings season kicked off after the market closed yesterday, when Alcoa (AA) released June-period financials. Investors were pleased with the aluminum maker’s results, which were better than expected thanks to strength in the engineered products and primary metals businesses. AA stock is moving modestly higher ahead of the bell, as a result. Shares of AeroVironment (AVAV) are also indicating a stronger opening this morning, after the aerospace and defense company announced April-period financials that topped investors’ expectations. On the other hand, April-quarter results and an updated outlook from restaurant operator Bob Evans Farms (BOBE) did not garner a warm reception on Wall Street, causing BOBE to move slightly lower in the premarket. Shares of Celgene (CELG) are also showing some weakness in pre-market trading, after the drugmaker issued disappointing results from a late-stage clinical trial. – 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 - Traders on Wall Street hoping for a Monday-Tuesday reversal in the equity markets were sadly disappointed yesterday as stocks started the day lower and fell from there, pushing downward even more sharply during the latest session than had been the case to start the week on Monday. Even so, there was no panic selling, as even the smaller-cap stocks, the recent weak link in the equity chain, managed to end the day somewhat off of their earlier lows.

The big concern at this time seems to be the upcoming flood of second-quarter earnings reports, a tide that began yesterday after the close, when aluminum giant and erstwhile Dow Jones Industrials component Alcoa (AA) reported its results. The sense of good feeling engendered by that positive outcome could well help stocks in the near term following yesterday's relatively large pullback. A secondary issue affecting trading this week has been the succession of weaker economic readings out of Germany, the largest economic factor in the euro zone. The weaker figures have come in manufacturing orders, industrial production, and then yesterday in its international trade figures.   

As to the stock market, it had battled fiercely to get to 17,000 in the Dow last week, when it attained that important psychological threshold late in that stretch. However, after achieving this level, stocks barely held there on Monday, before pushing through it on the downside early in yesterday's session. At the same time, the Standard and Poor's 500 Index, which had gotten within 15 points, or so, of 2,000 on an intraday basis last week, fell a bit further below that point yesterday. Our thinking is that the paucity of profit warnings going into reporting season may be generating too much complacency among traders, and that could pose a problem for the market should these high expectations not be met over the coming weeks.

Meanwhile, the leading averages have fallen back somewhat the past two sessions, with the Dow shedding another 118 points in trading yesterday; the S&P 500 Index falling 14 points; the NASDAQ, which was proportionately weaker than the first two indexes tumbling 60 points; and the small-cap Russell 2000 declining by 14 points. As was the case on Monday, the advance-decline ratio was decidedly negative on the Big Board and even more so on the tech-laden NASDAQ, where decliners held a notable four-to-one edge. Interestingly, there were more new lows on the NASDAQ yesterday than new highs, although the latter still held a nice edge on the NYSE. Among the weaker groups in trading yesterday were the technology stocks, led downward by both Google (GOOG) and Netflix (NFLX). The biotech sector also was under pressure. As has been the case throughout the year when the stock market sells off, the interest-rate-sensitive utilities have managed to outperform.     

Looking ahead, we find that stocks fell back in Asia overnight, with the Hang Seng Index tumbling by 1.6% on softer-than-expected inflation data out of China. In Europe, meanwhile, stocks were heading lower for the fourth time in as many sessions. Equities have been under pressure there, as noted, due to weak economic metrics coming out of Germany. As to our futures, they are now up modestly with less than an hour to go before the start of the trading day, gaining some traction in the past 15 minutes, or so. Gold, too, is moving higher, while crude oil is largely unchanged. As to the aforementioned Alcoa, shares of the aluminum maker are suggesting about a 2% gain at the open following its upbeat release to get second-quarter earnings season under way.

Finally, investors should note that the Federal Reserve will release the minutes from its last FOMC meeting this afternoon. Perhaps the lead bank will give some hint as to when it sees the first instance of monetary tightening taking hold. - Harvey S. Katz  

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