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After The Close - The U.S. equity market rebounded forcefully after yesterday’s notable setback. By the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index were 159, 35, and 15 points higher, respectively. Overall, advancing issues led decliners by a healthy margin on both the New York Stock Exchange and the NASDAQ. However, we would not try to read too much into the results of the last few days, as the trading volume has been light, which, as we noted in our market commentary at the start of this week, can produce swift and sometimes pronounced swings in either direction. That has certainly been the case this week, and may continue to be so as trading could remain light heading into the long Memorial Day weekend.

From a sector perspective, it was all up arrows among the top-10 groups. The last holdout, the utilities, moved into positive territory after the minutes from the Federal Reserve’s last monetary policy meeting (more below) showed that the lead bank has no intention of raising short-term rates anytime soon. A lower interest-rate environment will probably push more income-oriented investors out of fixed income and into higher-yielding equities. Meantime, leadership came from the energy, technology, and industrial stocks. Speaking of energy, word surfaced this afternoon that Russia and China have entered into a 30-year agreement to develop natural gas. If anything, the deal is another slap in the face of the coal producers. Within the energy space, the coals stocks were the only group that finished the session in the red.

We think a big reason for the light trading volume is the lack of any major economic data, to go along with slowing earnings news. That will change a bit the next few days with data due on existing (Thursday) and new (Friday) home sales. As noted, we also received the minutes from the latest FOMC minutes this afternoon. The report did provide a slight boost to an already notably higher market. After hawkish FOMC voting member Charles Plosser hinted yesterday that a hike may be in the country’s best interest, the minutes painted a different picture. The report cited concerns about the impact of a possible slowdown in the U.S. housing market, slowing economic growth in China, and the geopolitical tensions in Eastern Europe, on the U.S. economy. Thus, the central bank is in no rush to raise interest rates. The latter statement gave a further late boost to the equity market and the U.S. dollar.

On the earnings front, the newswire was dominated by the retailers, who inked mixed to generally disappointing results. On the plus side, was a very strong quarterly showing from high-end jewelry maker Tiffany (TIF). And shares of the company hit an all-time high during the session. Conversely, the investment community was disappointed with the latest results from Lowe’s (LOW), Target (TGT), and American Eagle Outfitters (AEO). That said, despite the latter earnings misses, the consumer discretionary stocks were higher today. Investors should also note that former Dow-30 component Hewlett-Packard (HPQ) was scheduled to report its latest quarterly results after the close of trading. Shares of the computer giant were lower ahead of the report.

Looking ahead to the remainder of this week, we would not be surprised if we saw some more exaggerated trading swings. The market appears to be moving sideways, with the both the bulls and the bears not showing any sustained conviction at this time. Investors are balancing frothy valuations against the lack of many other attractive investment alternatives at this time, which was further enforced by the likelihood that the Federal Reserve will keep short-term rates near zero for an extended period. In the end, the equity market looks to be the clear winner these days. - William G. Ferguson

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

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12:20 PM EDT - The U.S. stock market got off to a stronger start this morning, but is now having some difficulty holding its gains. At just past noon in New York, the Dow Jones Industrial Average is up 117 points; the broader S&P 500 Index is ahead eight points; and the NASDAQ is tacking on 13 points; but the small-cap Russell 2000 has now turned negative. Market breadth shows some support for equities today, as rising stocks are modestly ahead of decliners on the NYSE. All of the major market sectors are in positive territory, for now. The energy names are making strides, as the price of crude oil, now at $103 a barrel, is up slightly. The financials, too, are moving notably higher. Meanwhile, the high-yielding utility issues are lagging.

Overall, the market continues to move in a sideways range. Also, trading volumes have been a bit light lately. This may suggest that the big institutions have been staying put in the defensive names, while short-term traders have been sitting on the sidelines until the market finds direction. Notably “value” issues have been outperforming “growth” names over the past several months, and it seems traders have become more risk averse. While the market is not technically in a correction, it seems some consolidation has been needed, giving a chance for traders to adjust their assumptions.

Meanwhile, the economic news has been limited this morning. Federal Reserve Chair Janet Yellen is giving a commencement address at Yankee Stadium, but economics is not expected to be on the agenda. Later, the minutes from the FOMC’s April 30th meeting will be released, and that item will likely be closely dissected.

Finally, traders received reports from several key retailers. As was the case yesterday, the results were mixed. Specifically, Lowe’s (LOW) stock is slipping, as investors were somewhat disappointed with the building supplier’s results. Target (TGT) put out lackluster results, too, sending that stock nominally lower. But, things went better for Tiffany (TIF). That stock is up after upscale jewelry retailer put out strong numbers.  - Adam Rosner

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

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Stocks to Watch from The Survey Retailers, many of which have fiscal years that end in January, continue to dominate the earnings calendar today. Although April-period results from home-improvement retailer Lowe’s (LOW), general merchandise seller Target (TGT), and home goods retailer Bed Bath & Beyond (BBBY) were met with ho-hum reactions on Wall Street (the stocks are little changed ahead of the bell), investors cheered quarterly financials from jeweler Tiffany & Co. (TIF), which delivered much better-than-expected sales and earnings in the April term, in addition to increasing its forward-looking guidance. TIF is indicating a nicely higher opening, as a result. On the other hand, pet supplies store PetSmart (PETM) disappointed investors with its results, and the equity is moving notably lower in the premarket, in response. Shares of financial software developer Intuit (INTU), meat and packaged foods company Hormel (HRL), and salesforce.com (CRM), a leading provider of on-demand customer relationship management services are also moving lower ahead of the bell on earnings news. – 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 - Just when it appeared as though the selling in the earlier part of this month had run its course, Wall Street had one more surprise for those recently chastened bulls, as stocks fell broadly and sharply yesterday, especially in the small- and mid-cap categories, which earlier this month had also taken the brunt of the selling.

Meanwhile, behind this latest pullback were concerns about earnings in the retail sector. Here, a number of companies posted either lackluster quarterly results or gave unimposing guidance for the rest of the year. The poor showing by this group included results from Dick's Sporting Goods (DKS) and Staples (SPLS). In all, shares of the former plunged almost 18%, while Staples stock was off by more than 12% on the day. In truth, not all of the retailers had dour tidings, but there were enough of them to tilt the sector's bias to the downside. One exception was The Home Depot (HD - Free Home Depot Stock Report). That home-improvement retailer, the last of the Dow-30 to report, was one of the few equities in this 30-stock composite to record a gain on the day, posting an increase for the session of almost two dollars a share. Very few other Dow stocks joined the bullish parade, however. 

Then, there were some contradictory musings from two high-profile regional Federal Reserve Presidents. On point, Philadelphia Fed President Charles Plosser observed that the housing market's fundamentals remained sound, and, as such, he suggested the lead bank could start raising interest rates sooner rather than later. That was because it was likely the economy would heat up over the course of this year and into 2015. But it was a different story for New York Fed President William Dudley, who saw a weaker revival in the critical housing sector and a more protracted rise in interest rates.

Meanwhile, these conflicting views were enough to further shake things up on Wall Street, where stocks began the day lower, then tried to rally into the late morning, before finally giving up and heading steadily downward by lunch time and through much of the afternoon. Regarding such Fed observations on housing, we note that tomorrow and Friday will see the release of data on sales of existing homes and sales of new houses, respectively, for April. Increases are the expectations in each category. 

Such appraisals aside, it was a light news day as far as the economy was concerned, and this news gave the sellers a clearer path to the exits, which they certainly took advantage of as the day wore on. In the meantime, today will also be a relatively light day for economic news, save for this afternoon's expected release of the Federal Reserve's minutes from last month's FOMC meeting. Such releases can at times be market moving, although we are somewhat doubtful that will be the case later this afternoon.

As to the market's path yesterday, equities tumbled broadly and fairly deeply with the Dow ending the day off by 138 points. The lone bright note for the bulls, if we could call it that, was the fact that stocks closed moderately off of their lows. The Dow, for example, had been off by about 170 points at its nadir. Also notably weaker yesterday were the S&P 500 Index (off 12 points), the NASDAQ (lower by 29 points), and the small-cap Russell 2000 Composite, which was in the red to the tune of 16 points, or better than one percent on the day. Most groups saw weakness, as well, with a particularly steep pullback in some basic materials issues.   Here, the steel group led the way lower. 

Now, a new day dawns and already we have seen some choppiness in Asia overnight most likely influenced by the broad selling yesterday in New York. Japan's Nikkei was in the forefront of this selective weakness. At the same time, equities are pulling back in Europe thus far this morning, save for the Frankfurt DAX. It seems that Europe's leading bourses were uncertain about economic data due out for the euro zone later in the week. However, on our shores, the S&P 500 and the NASDAQ futures are both tracking a bit higher so far this morning, presaging a likely better opening for the bulls when trading gets under way in less than an hour from now. - Harvey S. Katz

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