Loading...
 

After The Close - The U.S. stock market managed to make some progress today. At the close of the session, the Dow Jones Industrial Average was up 42 points; the broader S&P 500 Index rose six points; and the technology-heavy NASDAQ tacked on 13 points. Market breadth was largely mixed, as advancing stocks were about even with decliners on the NYSE. Most market sectors pressed ahead, with sizable gains in the energy group. Notably, this sector has been up for the past couple of days, as military turmoil in Iraq has been driving up crude oil prices. The technology issues, too, put in a solid performance. In contrast, the consumer non-cyclical issues lost ground, and the healthcare names also struggled.

Technically, stocks seem to have found some support today, after pulling back earlier in the week. It is not clear if additional consolidation is in order, or if stocks will press higher from here. But, the VIX retreated a bit to 12.01, and that shows investor may be feeling a bit better.

One major catalyst will likely be the upcoming second-quarter earnings season, which will be starting in mid-July. However, some companies will likely be issuing pre-announcements and earnings revisions, and this will be widely watched. For the most part, analysts have been maintaining their expectations, with a particularly strong forecast for the second half of the year. While this is encouraging, it may also be harder for companies to beat these numbers.

On a related note, chip giant Intel (INTC - Free Intel Stock Report) recently upped its guidance, sending that stock higher.

There were also few other recent corporate reports worth mentioning. For one, shares of Finisar (FNSR) were trading sharply lower, after that technology company put out a weak report and issued disappointing outlook.

Finally, today’s economic news was largely mixed. There is likely little to worry about on the inflation front. The Producer Price Index slipped 0.2% in the month of May. Expectations had called for a slight increase, as had been the case in March and April. Elsewhere, the consumer may not be as optimistic as had been hoped. Specifically, The University of Michigan’s Consumer Sentiment survey came in at 81.2 for June, where analysts had been looking for a slightly higher figure. - 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 - Trading action was choppy this morning, on the final day of what has been a down week for the market so far. After a positive opening, the major U.S. equity indexes all moved in sync, hitting their lows for the morning around 10:00 EDT. From there, stocks rebounded nicely, and were holding onto modest gains as trading in New York crossed the noon hour.

Investors digested a somewhat positive report on wholesale prices this morning. The Labor Department announced that the producer price index for May was down 0.2%, in sharp contrast to the 0.5% rise in March and 0.6% in April. As an added indication that inflation remains in check, this gives the Federal Reserve more leeway in keeping interest rates lower for an extended period of time, which is good news for equities. However, when stripping out food and energy, the core figure for wholesale prices was flat.

Meanwhile, the latest consumer sentiment reading from the University of Michigan sank to 81.2 in June, while the consensus was looking for an increase. It also marked the gauge’s lowest point in three months. Traders apparently also shrugged off the fact that U.S. oil futures have spiked to a nine-month high, due to the escalating violence in Iraq.

As of 12:00 EDT, stocks had were in retreat from their highs for the morning, with the Dow Industrial Average, S&P 500, and NASDAQ each holding onto gains of about one-quarter of a percentage point.

Over in Europe, the equity markets in Europe also showed mixed action, initially taking a hit from fears of oil supply disruptions. Also not helping was the Bank of England’s hinting that an interest rate hike may not be far in the offing. Shares on London’s FTSE took this the hardest, shedding over three-quarters of a percent on the day. Germany’s DAX and France’s CAC-40 fared a bit better, however. Shares on the two bourses were each down about 1% in early afternoon trading, but had trimmed their losses to around a quarter percent as their respective sessions approached the closing bell.  – 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 SurveyIt’s another quiet day on the earnings front, but the news that is out is notable. Shares of Intel (INTCFree Intel Stock Report) are up nicely ahead of the bell, after the chipmaker and Dow-30 component raised its second-quarter revenue guidance, citing strong demand for business PCs. Conversely, the stock of Finisar (FNSR) is plunging in the premarket, after the designer of optical subsystems and components for high-speed voice, video, and data communications released April-period results and updated its outlook, neither of which sat well with investors. 

Elsewhere, on the M&A front, shares of Express (EXPR) are soaring in pre-market trading, on news that private-equity firm Sycamore Partners has amassed a 9.9% stake in the apparel and accessories retailer. Moreover, Sycamore said that it is interested in acquiring the entire company. Finally, Internet-based travel agency The Priceline Group (PCLN) has agreed to purchase online restaurant reservation service OpenTable for $2.6 billion. PCLN stock is little changed ahead of the bell, but the news appeared to buoy shares of OpenTable’s peers, such as Yelp (YELP), which is indicating a sharply 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 - After a bit of a hiatus, the bears are once again trying to make a statement. Prompted by a series of events both on the homeland and overseas, the selling has picked up, particularly yesterday, in a market that entered the current five-day stretch ripe for some profit taking. Indeed, the bears extended Wednesday’s losses yesterday, with respective declines of 110, 34, and 14 points for the Dow Jones Industrial Average, the NASDAQ Composite, and the S&P 500 Index. It also was not a good day for those investors long small- and mid-cap stocks. Overall, declining issues led advancers by a sizable margin on both the Big Board and the NASDAQ.

Pushing equities lower were several events in the last few days. On the economic front, investors were unnerved by the World Bank’s downwardly revised growth estimates for the global economy in 2014,a weaker-than-expected report on U.S. retail sales, and a slight increase in weekly initial jobless claims. Likewise, investors were spooked by the unrest in the Middle East—and the possible subsequent impact that higher energy prices will have on the performance of the global economy. Crude oil prices hit $107 a barrel on the New York Mercantile Exchange this morning on fears of the escalating conflicts in oil-rich Iraq.

From a sector perspective, it should come as no surprise that the more-economically sensitive areas struggled yesterday. The biggest laggards were the basic materials, consumer discretionary, industrial, and technology stocks. Conversely, energy stocks rose on the escalating crude oil prices. The utilities issues also were in demand, as skittish investors sought safety. The S&P 500 Volatility Index (or VIX), also known as the “fear gauge,” rose sharply yesterday and a further move higher today seems likely.

Elsewhere, the major indexes in Asia finished nicely higher overnight. However, trading on the Continent so far today has been very much in favor of the bears. Our sense is that the concerns about the unrest in the Middle East—and the impact it is having on crude oil prices—is unnerving investors, much like it did here yesterday afternoon.

Meantime, a few minutes ago, we received the latest report on producer (wholesale) prices for the month of May. Specifically, the Labor Department reported that the producer price index for May fell 0.2%, which was a stark contrast to the respective 0.5% and 0.6% increases registered in March and April. However, this situation bears watching going forward, as half of the May decline was driven by a 0.9% decrease in gasoline prices. This could change rapidly if the aforementioned situation in the Middle East pushes oil and gasoline prices significantly higher in the coming months.

With less than an hour to go before the commencement of trading on these shores, the U.S. futures are pointing to a lower opening for the U.S. equity market. We think, given the dearth of earnings and economic news stateside, it will take a big effort on the part of the bulls to wrestle control of trading back from the bears. The market entered the week looking overextended and with the reports of escalating unrest in the Middle East, some more selling looks likely in what is shaping up to be a losing week on Wall Street. Stay tuned. - William G. Ferguson        

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