After The Close - The U.S. stock market traded lower today. At the close of the session, the Dow Jones Industrial Average was off 102 points; the broader S&P 500 Index was off seven points; and the technology-heavy NASDAQ surrendered six points. Market breadth was largely unfavorable, as declining issues outweighed advancers by a two-to-one margin on the NYSE. Further, almost all of the market sectors lost ground today. There was notable weakness in the high-yielding utilities, a group that had seen some investor support earlier this year. Too, the financial issues declined today. In contrast, the energy stocks pressed higher, possibly helped by rising commodity prices. Also, the technology sector held up quite well, all things considered.

Technically, stocks may be due for a pause, or even a small pullback, after running up in price over the past couple of weeks. Should this happen, it may not be an entirely negative development, as it would give traders a chance to take some profits, and reposition their portfolios. Pullbacks also provide more reasonable entry points for traders looking to initiate new positions. Traders were likely feeling a bit more apprehensive today, as the VIX moved up about 5%, to about 11.62. Notably, this figure is still a very tame reading.

There were no major economic reports released this morning. Traders do not like information vacuums, and the lack of news probably did not help matters. Things are slated to pick up tomorrow, as several reports are due out. Specifically, we get a look at the employment situation, as the weekly initial and continuing jobless claims will be released. Also, we get a look at retail sales for the month of May, as well as business inventories for April. So, it should be a fairly busy day.

We received a few corporate news items today, and some of these likely deserve attention. Shares of ULTA Salon (ULTA) moved sharply higher, as the beauty supply retailer issued strong results. Elsewhere, Synaptics (SYNA) stock was up, after the technology company provided an upbeat outlook and making an acquisition. - Adam Rosner

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


12:15 PM EDT - Traders appear to be engaging in some profit taking this morning, with the Dow Jones Industrials, NASDAQ, and S&P 500 all showing modest declines at 12:00 EDT. Considering the record levels achieved in recent days, the downticks shouldn’t come as too much of a surprise.

With the prevailing vacuum of news on the economic front, those looking for a catalyst for the downward move can reasonably point to the latest report from the World Bank. Specifically, its Global Economic Prospects release indicated a downward revision in its estimate for economic growth in 2014. Its latest prognostication is for an increase of 2.8%, versus its earlier forecast of 3.2%. Among the factors cited for the reduction were severe winter weather in the U.S. and the ongoing crisis in Ukraine.

Overall, the Dow Industrials and S&P 500 marked their high points for the morning at the very start of today’s session, and both were trading just a few points above their lows as we crossed the noon hour in New York. Of the two, the S&P was faring relatively better, with a loss of about one-third a percentage point, while the blue chips were down about half a percent. The NASDAQ, meanwhile, traced out a different path, opening at its low for the morning and then clawing its way back to just a couple of points shy of the breakeven mark.

Across the Atlantic, the European exchanges exhibited more uniform behavior, with stocks largely maintaining a downward bias throughout the trading day. Germany’s DAX and France’s CAC-40 turned in the weakest performance, each falling by nearly a full percentage point, while London’s FTSE limited its losses to half a percent.

Traders will have more solid data to digest tomorrow, as the aforementioned dry spell for economic news breaks with the release of advance retail sales figures and the latest numbers for initial unemployment claims. - Mario Ferro

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


Stocks to Watch from The SurveyThere isn’t much earnings news out today, but the few reports that did emerge were largely upbeat. Investors appeared pleased with April-period results from tax preparer H&R Block (HRB) and bid the stock moderately higher in the premarket as a result. Financials from cosmetics retailer Ulta Salon (ULTA) garnered an even warmer reception on Wall Street, and are indicating a sharply higher opening this morning in response. Shares of Rambus (RMBS) are up nicely ahead of the bell, as well, after the semiconductor company raised its second-quarter guidance. 

Elsewhere, on the M&A front, Synaptics (SYNA) stock is soaring in the premarket, after the maker of touch-sensitive pads and screens updated its guidance and struck a deal to acquire Japan-based industry peer Renesas for $475 million. – 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 - It was a nondescript day of trading on Wall Street yesterday. The major equity indexes never strayed too far in either direction from the neutral line. However, it is worth noting that the modest earlier losses were pared by the closing bell, and in the case of the Dow Jones Industrials and the NASDAQ modest gains were booked on the day. The S&P 500 Index fell a few points, but still finished the session just seven points shy of its all-time high. The fact that the Dow and the NASDAQ Composite were able to eke out small gains on a day when the profit takers were looking to make a move showed that the bulls are not willing to relinquish the tight grip they have on trading. Overall, market breadth was mixed, with the spread between advancing and declining issues narrow on both the Big Board and the NASDAQ.

What we did see during yesterday’s lackluster trading session was some sector rotation. Monday’s laggards, including the consumer staples and healthcare stocks, were in demand. We think this was more about some selective bargain hunting rather than investors looking for more safety, which equities in those two groups tend to provide. Investors still appear willing to add risk to their portfolios, which was bad news for bonds yesterday. In fact, the yield on the 10-year Treasury note, which moves in the opposite direction to the price, moved a few basis points higher. This may have adversely affected the performance of the utilities, which at times compete against bonds for investors seeking income.

Meantime, it was another constructive day for the technology stocks, which, after a rough stretch earlier this year, have shown renewed strength in recent weeks. The strength of the tech issues, which included the shares of social media and semiconductor companies yesterday, is a big reason why the NASDAQ Composite is approaching its 52-week high.

The news on the U.S. economy continues to be encouraging. Yesterday, we received a positive report on wholesale inventories, which showed a gain of 1.1% last month. The National Association of Independent Businesses also reported that small business sentiment rose to a six-plus year high, which is another sign that domestic economy is accelerating after a weak start to the year. The business beat will be quiet today, but picks up tomorrow when the much anticipated report on monthly retail sales is released at 8:30 A.M. EST.

Meanwhile, the news from Corporate America has been light, at least from an earnings perspective. However, we did see some more merger and acquisitions unfold over the last few days, which many pundits take as a sign that the market is strengthening. While such deals are encouraging, we are hesitant to read too much into the latest transactions, as some of the dealings could be driven by companies with a lot of cash on hand wanting to take advantage of the low borrowing rates currently in place.

Elsewhere, the major indexes in Asia finished mixed overnight, with China’s Hang Seng retreating and Japan’s moving higher, which was a reversal of Monday’s movement for those two indexes. However, trading in Europe is a bit more defined as it moves into the second half of the session on the Continent. All of the major European bourses are lower, with a profit warning from German airline Lufthansa hitting travel stocks. Lufthansa shares are down sharply on heavy volume after the company said it would not reach its profit targets for the next two years.

Likewise, with less than an hour to go before trading commences on these shores, the U.S. equity futures are presaging a lower opening for the U.S. equity market. A similar start to the trading day unfolded yesterday, but the bulls were able to stage a mild rally. Will we see a similar type scenario today or is this opportunity the bears were waiting for? Stay tuned.  - William G. Ferguson   

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