After The Close - The major U.S. equity indexes retraced a good portion of yesterday’s losses—and then some in the case of the NASDAQ—despite the lack of any major positive market catalysts today. The investment community brushed off some disappointing data on the U.S. economy (more below) and did not dwell on the escalating conflicts overseas, which it did during yesterday’s session. Our sense is that investors still don’t have many attractive alternative investments to stocks and looked at yesterday’s selloff as a bargain hunting opportunity, despite valuations still being very frothy. Too, the U.S. equity market has been Federal Reserve—not GDP—driven through most of the bull run and that certainly seemed to be the case once again today. Both large- and small-cap stocks were higher today, with advancing issues leading decliners on both the New York Stock Exchange and the NASDAQ.

From a sector perspective, it was all up arrows among the top-10 groups. Leadership came from the healthcare, consumer discretionary, and technology stocks. Within the technology space, shares of the information technology services and consulting companies were the big winners. The group was also helped by strength in the shares of industry leader Google (GOOG). Investors were particularly excited to see the technology leader unveiled a new $99 smartphone and make a big push into the TV market with an Android-powered TV. The company appears poised to challenge Apple (AAPL) with a slew of new products in the second half of this year. Also in the tech area, shares of online retailer zulily (ZU) rose sharply after a ratings upgrade from a major investment bank.

It also was a monumental day for the broadcasting companies. Specifically, the Supreme Court ruled that Aereo, a video-streaming service, violated U.S. copyright law by selling the broadcasters' free over-the-air signal through its online subscription service. Not surprisingly, shares of the major media companies, including CBS Corp. (CBS), Walt Disney (DIS Free Disney Stock Report), Comcast (CMCSA), and 21st Century Fox (FOXA), rose on the Supreme Court’s landmark decision for the content creators.

As noted, the economic news after a good day yesterday was far from uplifting today. Before the market opened the government released a one-two punch of dour reports. Specifically, we learned that the nation’s GDP contracted by an annualized rate of 2.9% in the first quarter and that durable goods orders declined by a greater-than-expected 1.0% in May. The investment community’s reaction to the reports was a bit nondescript as they did not provide any major surprise, and the GDP contraction was most likely weather-related and lacked the healthcare spending that was initially expected. The spending on the healthcare side should pick up in the second half of the year as the Affordable Care Act hiccups are rectified. Too, the latest housing market data and consumer confidence reading were reassuring to investors.

Looking at the final two days of this week, the only notable news from the business beat will come tomorrow, with reports on weekly jobless claims and personal income and spending due to be released. Likewise, the earnings news will be light, but there are some industry heavyweights on the docket, with the latest quarterly results from ConAgra Foods (CAG), Lennar (LEN), McCormick & Co. (MKC), and NIKE (NKE Free Nike Stock Report) coming tomorrow. This light schedule on the economic and earnings fronts may have investors focusing more on the overseas tidings, which could provide another opportunity for the bears. We shall see… - William G. Ferguson

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


12:15 PM EDT - The U.S. stock market pulled back a bit at the start today, but has since firmed up. From here, it remains to be seen if the bulls can continue their buying campaign through the session. Notably, yesterday the market attempted to rally in the middle of the day only to retreat back into negative territory. At roughly noon in New York, the Dow Jones Industrial Average is up 17 points; the broader S&P 500 Index is ahead by four points; and the NASDAQ is tacking on nine points. Market breadth suggests a mixed market, with advancers about even with decliners on the NYSE. However there are some pockets of strength today. Leadership can be found in the healthcare group. Also, some of the consumer cyclical names are doing well. However, the financials are lagging a bit.

Technically, the stock market has been holding up well, for the most part. However, yesterday’s move lower in the late afternoon may suggest that some consolidation is still in order, especially as some of the large averages approach widely-watched milestone levels. For instance, the Dow is not too far from the 17,000 area, and it may encounter resistance as it looks to move past this widely watched area.

Meanwhile, today’s economic news was uninspiring. The final estimate for first-quarter GDP showed a decline of about 2.9%, while many had been looking for a more modest contraction. This news was accompanied by another somewhat dour report. Notably, durable orders dipped about 1% in May, where analysts had been calling for a slighter decrease. The fact that the market is taking the day’s weak economic news in stride could be a positive indication. For one, many traders are likely looking ahead to the second-quarter figures. Also, a few weak reports may alleviate concerns that the economy is heating up too fast, which might prompt the Fed to act accordingly.

We received profit reports from a few large companies today. Monsanto (MON) shares are moving up, after the agricultural chemicals giant put out encouraging guidance. Also, General Mills (GIS) is seeing its stock slip on a weaker-than-expected report. Meanwhile, Bed Bath and Beyond (BBBY) is set to issue its figures after the close. - 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 SurveyInvestors are digesting some earnings news today. On the bright side, Wall Street appeared pleased with quarterly financials and/or outlooks from educational services provider Apollo Education Group (APOL), book seller Barnes & Noble (BKS), and Monsanto (MON), a developer of seeds, crop protection products, and other agricultural solutions. Monsanto delivered better-than-expected May-period results, increased its guidance, and announced a $10 billion share-repurchase authorization, while Barnes & Noble unveiled plans to separate its retail and Nook e-reader businesses. Consequently, all of these equities are moving higher ahead of the bell, with MON and BKS showing considerable strength. Conversely, investors took issue with quarterly results from cereal and packaged foods company General Mills (GIS), pushing that stock lower in the premarket. – 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 edged still higher for the first half of the trading day yesterday, and in the process, overcoming a nominally lower performance on Monday. That slight pause had followed a half dozen mostly higher sessions in a row. But stocks wilted soon after the midday hour, and the selling picked up as the session wound down. Indeed, by the close, the Dow Jones Industrial Average and the Standard and Poor's 500 Index had tracked notably lower, while the NASDAQ's gains, which had held up until the final hour of the trading day, gave way, as well, producing a moderate loss.

What seems to have turned sentiment around was the intensification of geopolitical concerns, having to do mainly with Iraq, but also with that other hot spot, Ukraine. Overall, the turmoil in those strife-torn lands have now again escalated and worries in the investment community have begun to proliferate once more after a brief span in which such fears had eased, if slightly. High valuations are also a concern, and these periodically become a factor in how investors view the equity market. Finally, Philadelphia Federal Reserve President Charles Plosser, a noted interest-rate hawk, said that short-term borrowing costs might have to be raised sooner than forecast if unemployment continues to fall and inflation steps up further, as it did on the consumer end in May. He felt that with the Fed now closer to achieving its objectives than before, rate hikes could come "fairly soon," although he did not specify an anticipated time for such preventive rate action by the lead bank. 

Meanwhile, such worries helped to dampen additional enthusiasm for stocks, which had been borne of some positive economic metrics that were released over the past 48 hours. To wit, Monday had seen data issued showing that sales of existing homes had ticked up modestly last month. Then, yesterday, the Conference Board, which was expected to report a slight pickup in consumer confidence for the first half of this month, chimed in with a solid increase in that closely watched category. At the same time, the U.S. Commerce reported a six-year high in sales of new homes, with that volatile number rising by 18% in May. That rise compared favorably with the slight gain that had been the consensus view.

For a time, then, these better reports had helped to underpin stocks. However, with equity prices marching ever higher, a stronger catalyst than simply better economic news was apparently needed. And we did not get it. Of course, one afternoon of selling, which was not all that intense, to begin with, given where the averages now sit, does not make a watershed, and we are clearly not ready to suggest that the recent uptrend has been broken, or even mildly dented. But, at some point, rising markets do stumble, even if the backtracking is often modest, at first. For now, we suggest that this latest selling is a minor wrinkle, but one that will need to be watched given the elevated level of the market. 

As to the specifics, the aforementioned Dow fell back by 119 points; the Standard and Poor's 500 Index eased by almost 13 points; and the tech-heavy NASDAQ, once up more than 30 points, wound up 18 points in the red, for a negative turnaround of nearly 50 points. Also, many more stocks fell than gained on both the Big Board and the NASDAQ, although new highs for the past year still swamped new lows.      

Now, as we look ahead to a new day, we find that stocks were lower in Asia overnight, taking their cue from weakness on our shores yesterday, while equities are also tracking downward in Europe. As to our markets, the futures are likewise signaling some further backtracking at the open. Finally, on the news front, data just issued showed a much larger contraction in GDP than earlier estimated for the first quarter, with that metric plunging by 2.9% in the period's final revision. Earlier the drop in GDP had been estimated at 1.0%; expectations were that GDP would have fallen by 2.0%. At the same time, durable goods orders showed a drop of 1.0% in May, principally on contracting military orders. Expectations had been for a decline of 0.5%. A drop of almost 6% in airline orders, offset a 2.1% gain in demand for autos in the month. Encouragingly, orders for core capital goods--a measure of business investment--climbed 0.7% last month. In April, there had been a decline of 1.1%. - Harvey S. Katz

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