After The Close - The U.S. stock market took a minor pause today. This likely makes sense, given that equities have drifted consistently higher for the past week. At the close of the session, the Dow Jones Industrial Average was off 10 points; the broader S&P 500 Index was down about half a point; and the technology-heavy NASDAQ closed nominally higher. Market breadth was close to neutral, as declining stocks outweighed advancers by a thin margin on the NYSE. The major market sectors were divided. There was considerable strength in the basic materials group. The energy names also marched ahead. Nonetheless, there was weakness in the consumer non-cyclical names, and the healthcare group struggled.

In general, stocks have marched higher, demonstrating that the bulls remain in control of the market. The fact that all of the three major averages are now largely advancing in sync with one another is a positive development. Notably, some weeks ago, analysts and traders had concerns that the market had become a bit fragmented. If stocks move up from here, there are a few key price levels not too far away to watch. Specifically, the 17,000 area will likely be the next major target for the bulls on the Dow Industrials. Passing 2,000 would likely be critical for the S&P 500, which now stands about 40 points below that. Also, 4,400 should represent a meaningful number on the NASDAQ, which likewise is just below that area.

Meanwhile, traders received some constructive economic news today. Specifically, the housing market continues to show signs of improvement. Existing home sales came in at 4.89 million units, annualized, for the month of May. This reading was a bit better than many economists had expected, and was also up from the April figure. Tomorrow, we will get more information on this vital part of the economy, as new home sales for May are due out. In addition, a couple of widely-watched reports on home prices are set to be issued. In other areas of the economy, the Conference Board will provide its June consumer confidence number.

It was a relatively quiet day for corporate earnings releases. However, after the closing bell we will hear from semiconductor company Micron (MU). That stock traded lower today. It should be noted that with a roughly $34 billion market cap, Micron is a somewhat important part of the semiconductor industry. This release may provide traders with insights about the health of the technology sector.

Meanwhile, the June quarter is coming to a close, and traders may be paying a bit more attention to the corporate profit outlook. Given the overall level of the stock market, the importance of the upcoming earnings season should not be underestimated.  - Adam Rosner

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


12:05 PM EDT - What started out as a directionless day on Wall Street, has turned slightly negative as we reach the midday hour on the East Coast. The major U.S. equity indexes are now in the red, but still not too far removed from the neutral line. Investors are weighing some disheartening reports from overseas, particularly from the Middle East, against a reassuring economic report and some more merger and acquisition news from Corporate America. The former seems to be winning the tug-of-war right now, both here and on the Continent, where the major bourses are lower as trading nears the close. Overall, the spread between advancing and declining issues is narrow on the New York Stock Exchange, but the decliners are comfortably ahead on the NASDAQ.

From a sector perspective, it is mostly down arrows among the top-10 groups. Ironically, the biggest laggards are some of the more defensive groups, with the most pronounced selling in the telecommunications and consumer staples areas. The industrial stocks also are notably weaker thus far today. Conversely, there is some buying interest in the basic materials, energy, and, to a lesser extent, technology sectors. The energy stocks are higher as tensions in the Middle East escalate (see below), while the steel and gold stocks are showing strength in the basic materials space.

As noted, a heavy week of economic news got to a very good start. Specifically, the National Association of Realtors reported that existing home sales rose by 4.9%, on a month-to-month basis, in May, surpassing consensus expectations. This is an important report, as the housing and related homebuilding sectors are a major cog in the nation’s economic output. Not, surprisingly, the shares of the homebuilders are higher following the report, which also showed a nice jump in home prices and drop in the number of distressed property sales. Tomorrow, we will get a report on new home sales and also consumer confidence, so activity in the more economically sectors could be heavy tomorrow.

Elsewhere, the reports from overseas, particularly from Iraq, continue to unnerve investors and appear to be holding the major equity indexes in check. As the insurgents continue to take control of more cities in Iraq and move closer to Baghdad, Secretary of State John Kerry is meeting with Iraq’s Prime Minister to discuss the growing crisis in that war-torn nation. The price of crude oil continues to trade around $107 a barrel on the New York Mercantile Exchange on the Iraq concerns.

Meantime, investors are happy to see some more merger and acquisition in Corporate America. This, as noted above, is often seen as a sign of the stock market’s strength and that investors are confident enough to put some excess cash to work. Today brought news that Wisconsin Energy (WEC) is buying Integrys Energy (TEG) for $9.1 billion; Oracle (ORCL) is purchasing Micros Systems (MCRS) for $5.3 billion; Harbinger Group (HRG) made a $10-a-share bid for Central Garden & Pet Company (CENT); and Santander Consumer USA Holdings (SC) has agreed to buy General Electric’s (GE - Free GE Stock Report) consumer finance business in Northern Europe. - William G. Ferguson

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 SurveyAnother weekend has resulted in another flurry of M&A activity. After intense speculation last week, software developer Oracle Corp. (ORCL) has struck a deal to acquire MICROS Systems (MCRS), a provider of retail and hospitality service information solutions, for $68 a share in cash, or $5.3 billion ($4.6 billion net of MICROS’ cash). Both stocks are up slightly ahead of the bell, as a result. Additionally, shares of Central Garden & Pet (CENT) are indicating a sharply higher opening this morning, after Harbinger Group, an investment firm headed by Philip Falcone, made a $1.1 billion (including the assumption of debt) bid to acquire the producer and marketer of items for pets, lawns, and gardens. Harbinger already owns about 3% of CENT. The stock of Integrys Energy Group (TEG) is also spiking in the premarket, after the electric utility agreed to be acquired by industry peer Wisconsin Energy (WEC) for roughly $9.1 billion in cash and stock, including debt. Finally, shares of lululemon athletica (LULU) are up moderately ahead of the bell, after Dennis Wilson, founder of the athletic apparel retailer, sought the advice of investment bankers on how to gain more control and influence over the company after stepping down as Chairman last month. Mr. Wilson also voted against the new Chairman at the annual meeting that recently took place. – 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 path of least resistance for the stock market continues to be higher, as witnessed by the succession of higher closes last week. In truth, the gains were quite small--save for Wednesday, when a dovish statement by Federal Reserve Chair Janet Yellen, issued after the conclusion of the central bank's two-day FOMC meeting, helped to propel the Dow Jones Industrial Average to nearly a three-digit gain. Overall, though, the persistence of the bulls was rather impressive. That is especially so given the high level from which the equity market's latest gains have evolved.  

All told, the week ended quietly on a day in which the economic news was sparse and there were few items of significance globally that could shake things up. In fact, save for the normal trickle of earnings reports, which were mixed, the lone item of note was the speculation that there could be increased volatility due to quadruple witching, which refers to stock index futures, individual stock futures, stock index options, and individual stock options all expiring.

However, such volatility did not take hold. In fact, equities were generally more stable throughout the day than usual. Even so, the Standard and Poor's 500 Index did hit one more all-time high for the session, while the Dow, which had failed to do similarly over the prior fortnight, did so, as well. Wall Street has been basking in the glow of the recent Federal Reserve FOMC meeting, in which the central bank took a notably dovish stance with respect to the future course of monetary policy in general and interest rates in particular.  

All told, by the close, the Dow had added 26 points, to climb a little closer to the psychologically significant 17,000 mark, while the Standard and Poor's 500 Index added three points, and the tech-laden NASDAQ edged up almost nine points. Small advances also were secured by the S&P Mid-Cap 400 and the small-cap Russell 2000 Index. In addition, gaining stocks held sway over declining issues on the Big Board, to the tune of some 18 to 13, while the VIX volatility index hit a new 52-week low, although it did snap back a bit. Overall, the low VIX, or the fear gauge, attests to the lack of concern among many traders. Such complacency can be bearish, although the investment fundamentals are still quite positive--especially given the dovish monetary posture emanating from the Federal Reserve. 

Meanwhile, we now look ahead to a new week, and we once more will have little in the way of fresh earnings news, as we are still some three weeks, or so, away from the start of second-quarter reporting season. However, there will be no shortage of economic news to decipher and evaluate, starting out this morning with data on May existing home sales. That metric, which is due out in about an hour from now, is expected to show a modest increase over April's estimated annualized level of 4.65 million units. Then, tomorrow, we are scheduled to get data on the companion new home sales survey. Here, too, a small increase in the consensus forecast. Also, at 10:00AM (EDT), we should be getting the monthly survey on consumer confidence from the Conference Board. A flat-to-slightly higher reading is the forecast here.

The economic news then continues on Wednesday with scheduled reports on durable goods orders (where an unchanged reading is the forecast) and on revised first-quarter GDP. Here, an earlier estimated decline of 1.0% could well be increased to a setback twice as large. Then, on Thursday, we are due to get weekly jobless claims data and reports on personal income and consumer spending. The week then concludes with a survey on consumer sentiment on Friday.

As to the financial markets, they were mixed overnight in Asia, but are tracking notably lower thus far in Europe, pushed downward, perhaps, by fresh worries about the situation in Iraq. And on our shores, the futures are mixed, with the S&P 500 Index futures now showing a nominal gain, while the NASDAQ futures are now pressing a little lower. - Harvey S. Katz

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