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After The Close - It was by no means a wire-to-wire win for the bulls this week, but it was nonetheless a constructive five-day stretch for those long equities. After an impressive start to the week for the major market indexes, the bears responded in a big way on Tuesday and the averages fell sharply. However, the bulls quickly regrouped on Wednesday, helped by the minutes from the latest Federal Reserve monetary policy, and with yesterday’s modest gains and today’s advances (more below) making for a winning week on Wall Street. The ebb and flow of the major averages over the five-day stretch were not a surprise, as light trading volume can at times produce swift and pronounced changes in the direction of the market. Overall, investors are not shying away from equities, despite valuations being frothy. Indeed, the S&P Volatility Index (or VIX), also known as the “fear gauge,” fell below 11.50 in intra-day trading today, a level not seen in quite some time and clearly an indication that the market is overbought. Investors should note that the S&P 500 Index broke through the 1,900 level late in today’s session.

As noted, the final day of this low-volume trading week went to the bulls. Helped by some more positive data from the housing sector (see below) and Wednesday’s minutes from the Federal Reserve showing that the lead bank has no near-term plans to raise interest rates, investors were buying equities once again. This is not that surprising as the housing sector is a vital cog in the nation’s economic output and the low interest-rate environment limits the investment alternatives. All told, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index had added 63, 31, and eight points, respectively, by the closing bell. The small- and mid-cap indexes, which started the session a bit sluggish, also were higher today.

The buying was rather broadbased in the latest session. Leadership came from the industrial, consumer discretionary, and technology sectors. Within the latter space, we saw a nice advance from the shares of former Dow-30 component and computer giant Hewlett-Packard (HPQ), which reported its latest quarterly results a few days earlier and announced a major cost-cutting plan; the investment community clearly liked the latter news. Meantime, the more-defensive groups, including the utilities, telecommunications, and consumer staples, never strayed too far from the neutral line, which is not surprising as there is still an appetite for risk among investors.

We did see some notable individual movers today in addition to the aforementioned Hewlett-Packard. The stock of GameStop (GME) moved higher after the video game retailer reported higher-than-expected quarterly sales and profits and announced a jump in console sales. Conversely, the investment community did not like what it saw from apparel retailer Aeropostale (ARO) in the latest quarter and penalized the stock of the struggling retailer. It also was a difficult day for those with a position in Shoe Carnival (SCVL), as the stock of the shoe retailer fell sharply after the company significantly lowered its near-term earnings guidance. Nevertheless, as noted, the consumer cyclical sector was higher, led by the entertainment production and department store stocks. 

Looking ahead to next week, which will see trading start stateside on Tuesday as the market is closed on the Monday in observance of Memorial Day—a holiday in which the nation pays respect to our fallen heroes—the focus of the investment community should be on the economy. We will receive data on durable goods orders, consumer confidence, GDP, and personal income and spending. The tone of this economic news will probably play a big role in deciding whether the major equity averages finish higher for the month of May, which has historically not been kind to investors. The final week of the month will begin with the Dow Jones Industrial Average slightly above the neutral line. The NASDAQ, which tends to be a more volatile, has a bit more wiggle room to the upside.   - 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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12:10 PM EDT - The U.S. equity market got off to a good start on the eve of the long Memorial Day weekend. Without a doubt, traders and investors were encouraged by the latest favorable news on the housing front. Earlier this morning, the Commerce Department reported that sales of new single family homes were up by 6.4 percent in April, coming in at a seasonally adjusted annual rate of 433,000 units. In addition to being a larger-than-expected increase, it also marked a reversal from the declines of the prior two months.

Another positive sign was the fact that inventory was holding up reasonably well as an earlier shortage of available homes was seen by some as an impediment to sales. Also, Freddie Mac reported that the average rate on 30-year fixed mortgages was down to 4.14 percent this week, which was close to its seven-month low.

With little else on the economic front to move the markets, these data points were enough to set the positive tone for the major U.S. indexes. As we passed the noon hour in New York, the NASDAQ led the pack with a gain of just under half a percentage point, while the Dow Jones Industrials and S&P 500 were just a few steps behind, each up about one-third of a percent.

Meanwhile, a quick look at the European markets shows that things were somewhat less uniform across the Atlantic. Germany’s DAX and Frances CAC-40 dipped briefly into the red in early trading, apparently shaken by a decline in a business confidence survey in Germany, the EU’s largest economy. However, both recovered as the day wore on. As they approached the close of their respective sessions, the two bourses were trading near their highs for the day, with gains of around half a percent each. In contrast, London’s FTSE reached its peak at the start of trading, quickly dipped into the red, and then spent the rest of the day working its way back to just shy of break even. - Mario Ferro

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

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Stocks to Watch from The Survey Investors have their hands full with earnings reports (many of which are from retailers) again today, as April-period issuances are flowing in at a brisk pace. One of the biggest winners appears to be grocer The Fresh Market (TFM), which is seeing its stock rise sharply ahead of the bell after releasing quarterly financials and an updated outlook that sat well with investors. Wall Street also took kindly to April-period results and/or outlooks from video game seller GameStop (GME), athletic footwear retailer Foot Locker (FL), networking solutions provider Brocade Communications (BRCD), sporting goods seller Hibbett Sports (HIBB), and TiVo (TIVO), a producer of digital video recorders. Indeed, all of these equities are indicating higher openings this morning.

Apparel and accessories retailers, on the other hand, did not fare as well. To wit, shares of Aeropostale (ARO), The Gap (GPS), and Ross Stores (ROST) are all moving lower in the premarket on earnings news. ARO is getting hit particularly hard, after the struggling company missed on the top line and offered an outlook that was weaker than expected. Elsewhere, shares of chip maker Marvell Technology (MRVL) are also down modestly ahead of the bell, while the stock of computer company Hewlett-Packard (HPQ) has bounced around this morning, but is now indicating little in the way of change. – 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 - Stocks moved irregularly and somewhat nervously higher yesterday, with the bulls seemingly emboldened by the release of decent business metrics, led by positive indications on the existing home sales front (where not only were sales higher, but the supply of available homes increased too), as well as the continuing upbeat reactions to the release of the Federal Reserve's FOMC minutes during the prior session.

The gains, however, were uneven, with a continuing disconnect between the large-cap stocks and the smaller-cap issues. This dichotomy has been in some vogue in recent weeks and can be somewhat forbidding for less-aggressive investors. On point, when the Dow Jones Industrial Average had stormed ahead by 159 points on Wednesday, or about one percent, in a positive reaction to the aforementioned reassuring FOMC minutes, the small-cap Russell 2000 Composite and the Standard and Poor's Mid-Cap 400 Index had advanced by just about a half percentage point each.

Yesterday, however, it was the smaller- and mid-cap indexes that outperformed their larger-cap brethren (see below). Such rotation is not unusual and rarely signals that a change in direction is at hand. Nevertheless, such unevenness does bear watching, as well as necessitate some comment from time to time.    

In addition to the better comfort level from developments on our shores, the stock market received an early lift yesterday from reports that were issued showing stronger manufacturing data out of China and Japan. The stock market in the latter nation forged ahead on that news, partially reversing some recent weakness there. As to China, that nation has signaled that its trade balance is likely to improve going forward.   

As to other economic news, there was a somewhat disquieting report on U.S. weekly jobless claims issued about an hour before our equity market opened, but that dour issuance was offset by another solid showing by the leading indicators for April. Earnings news, meantime, was mixed, with most of the releases coming from the nation's retail chains. As to specifics in this sector, we received the disconcerting report of a wider loss at the giant retailer Sears (SHLD), but notably better results from upscale home products retail chain Williams Sonoma (WSM). Interestingly, Sears shares rose on the day, coming back from an earlier steep loss, while Williams Sonoma saw its stock press ahead aggressively, rising to a new 52-week high in the process. All told, that issue jumped by 8% to end the day at $69 a share. The past year's low has been $51.70 a share.

Our sense, meanwhile, is that the stock market is likely to continue giving a good account of itself in the weeks to come, in large part because the Fed minutes suggested rather definitively that the lead bank would be in no big hurry to start raising short-term interest rates. And low rates are normally a plus for the equity market. Of note, yields on fixed-income securities appear to be in no hurry to rise, with the yield on the benchmark 10-year Treasury note now at just 2.56%--hardly a level to inject fear in the hearts of equity holders.

As for the stock market, there was no rush to buy at the close, as there has been on some recent up days, and most indexes, while closing higher for the session, did not produce any headlines--especially in the larger-cap sectors. Of note, the Dow Jones Industrial Average gained a mere 10 points; the Standard and Poor's 500 Index rose four points; and the NASDAQ ticked up by 23 points, a far better showing than for the Dow, but still off from its peak intraday gain of 34 points. However, the small-cap Russell 2000 jumped 11 points, or just about one percent.     

Looking out to a new day, it will be an abbreviated session for the bond market, which will close at 2:00 (EDT) this afternoon, to allow participants to get an early jump on the three-day Memorial Day weekend. Trading in the stock market will follow normal hours. In the meantime, we will get a second look at the housing market, as the Commerce Department will issue data on new home sales at 10:00 (EDT) this morning. A modest gain is the forecast there. We also would look at the inventory figures, where an increase in supply, as we saw in the existing home sales data, would be constructive.

As to the market overseas, stocks in Asia were nicely higher overnight in Asia, led again by Japan's Nikkei, while in Europe stocks are wobbling a bit, after the report of a decline in business confidence in Germany, the Continent's largest economic player. In this country, meantime, our futures are heading a bit higher, presaging a possible early rise in our markets when trading gets under way in less than an hour form now. Finally, we take this opportunity to wish all of our readers a safe and happy Memorial Day, as we reflect on the sacrifices of our brave men and women in uniform over the centuries, as they strove to keep our way of life secure. - Harvey S. Katz 

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