After The Close - The U.S. stock market put in a solid showing today, highlighted by a strengthening performance in the late afternoon. At the end of the day, the Dow Jones Industrial Average was up 66 points; the broader S&P 500 Index was ahead 10 points; and the NASDAQ was higher by 23 points. Market breadth showed a favorable bias to the session, as advancing stocks outnumbered decliners by about two to one on the NYSE. Almost all of the various market sectors took part in today’s up move. There was particular leadership in the consumer non-cyclical issues. Also, the basic materials sector made notable progress. In contrast, the high-yielding utilities declined modestly today. While this defensive sector had been a favorite earlier this year, it has since lost some ground, as traders are now rotating into the more dynamic names. Ultimately, this may be a positive development, as it suggests that bullish sentiment is still intact.

Technically, the market has come a long way over the past few days. The S&P 500 Index has pushed into new-high territory, and seems to be holding its gains. Crossing the 1,900 area has likely been important for the S&P 500, as it may carry some "psychological" significance with retail investors. Too, the Dow is close to breaking into high ground, and the NASDAQ is firming up, which is encouraging.

Traders received some mixed economic news this morning, but seemed to take it in stride. The employment situation continued to make progress, as the recent weekly initial jobless claims came in better than had been expected. Meanwhile, the second estimate for first-quarter GDP, showed the economy contracted by 1.0% in the period. Economists had been looking for a more favorable reading with a decline of about 0.5%. Too, pending home sales put in a lackluster performance in April.

Finally, traders received a few notable corporate reports today. Specifically, Popeye’s Louisiana Kitchen (PLKI) stock moved sharply higher, as that company put out healthy figures. Things did not go as well for Costco (COST). That issue slipped a bit, after the retail giant reported uninspiring results. - Adam Rosner

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


12:00 PM EDT - Stocks are inching ahead today despite a weak report on the nation’s economic progress in the first part of the year. Right around the noon hour on the East Coast, the Dow Jones Industrial Average is up 20 points; the NASDAQ is ahead 17 points, and the S&P 500 is better by five points.

The morning began with a revised estimate of -1.0% for U.S. GDP in the first quarter, after an initial, slightly positive reading of 0.1%. The shortfall is largely being blamed on the awful weather in the winter months that caused production to be delayed and kept consumers off icy roads.

Stock investors aren’t taking the news badly, though, since there are some signs that business lost in January and February is now being made up. Another silver lining is that the rate of inventory building has slowed notably, pointing to the likelihood of a brisker pace of manufacturing activity ahead, including the present stanza.

As for the bond market, the yield on the 10-year Treasury note is down slightly, with its price moving in the opposite direction. That is what would be expected on word of an unexpectedly sharp contraction in GDP.

Much has been made of the bond market’s rally this year, even as stocks, which typically react differently to business news, have moved ahead, if modestly and unevenly. One clear fact supporting bond prices is the weakness in the economy early in 2014. Another theory for the strength in bonds is that investors are adjusting to the probability that the Federal Reserve will not be raising interest rates as quickly as earlier believed.

We would add that the recent strength in bonds is not just occurring in the United States, but in a number of other countries around the world. For instance, European nations, such as Spain and Italy, have seen yields on their government bonds fall precipitously since 2012, and are, somewhat surprisingly, not that much different from U.S. bonds.

In any case, lower interest rates are providing fresh support for the housing market, which had been wavering somewhat as mortgage rates rose. Government agency Freddie Mac reported today that the average rate on a 30-year mortgage fell to 4.12% from 4.14% last week. A year ago, the rate on a typical 30-year mortgage was 3.81%.

Among individual stocks, Hillshire Brands (HSH) is the star of the day, after receiving a takeover bid from Tyson Foods (TSN). - Robert Mitkowski

At the time this article was written, the author did not have positions in any of the companies mentioned.


Stocks to Watch from The Survey – As the latest earnings season draws to a close, there are not many companies in the spotlight today, though a few names are making headlines this morning on the M&A front. Notably, after much speculation, tech mogul Apple Inc. (AAPL) has agreed to acquire Beats Electronics for $3 billion in cash and stock, sending AAPL stock up slightly in premarket trading. Beats’ founders Dr. Dre and Jimmy Iovine will come aboard Apple as part of the deal.

Meantime, meat producer Tyson Foods 'A' (TSN) is making a play for Hillshire Brands (HSH), offering $50.00 per share in cash for its industry peer. This comes just after Pilgrim's Pride Corp. (PPC), one of the largest chicken processors in the United States, made an offer to acquire Hillshire Brands for $45.00. Shares of both Tyson and Hillshire are up ahead of the bell, with Hillshire showing considerable strength. Meantime, PPC is indicating a modestly lower opening. – Kathryn M. Drew

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


Before The Bell - It is proving to be extremely difficult to keep the currently emboldened bulls down these days. Of note, after experiencing some modest profit taking yesterday morning, which had seen the 30-stock Dow Jones Industrial Average fall to a morning loss of some 55 points, that index and the other broader composites all bounced off of their respective lows and managed to largely recoup those initial losses by early afternoon.

This up-and-down pattern followed a solid gain on Tuesday, which had come on the heels of the long Memorial Day weekend. That session, which was highlighted by a 51-point surge in the NASDAQ and a 16-point advance in the Russell 2000, giving each of these more speculative indexes a gain of better than one percent on the day. Regrettably for the bulls, there was no repeat yesterday, but there also was no sizable retreat. Overall, the equity market just drifted modestly to and fro for much of the session, with a slight tilt to the downside.     

In all, after making a half-hearted attempt to stage a mid-session rally, the stock market faded anew, pressing somewhat lower for the balance of the afternoon, finally closing with generally understated losses, made a bit worse during the final minutes of trading. All told, the Dow Jones Industrial Average lost 42 points; the Standard & Poor's 500 Index, in plus territory throughout most of the session, ended off by just two points; and the NASDAQ dropped 12 points. The small- and mid-cap composites also gave ground, albeit likewise grudgingly.

Basically, the stock market paused yesterday to digest its recent four-session gain, which had seen the Standard & Poor's 500 Index reach back-to-back all-time highs, with that broadly configured large-cap composite surging past 1,900 for the first time. Meanwhile, the Dow, in the wake of Monday's moderate gain, was within 60 points of its record 16,735 peak reached somewhat earlier in the stock market's venerable up cycle.  

Behind this uninspiring session, in part, were disappointing earnings reports from several of the nation's retail chains. However, other stores did rather well and a key homebuilder, Toll Brothers (TOL), saw its shares rise on better-than-expected quarterly numbers. Shares of that luxury builder are now nearer to their 12-month high than their low. Also, gold fell anew, dipping to levels not seen since early February. In all, the precious metal fell below the $1,260-an-ounce mark. Some technicians now see the metal being vulnerable to a further fall to a double bottom range of $1,180 to $1,200 an ounce. With producer and consumer inflation still very muted, there is little in prospect--save for a new military flare up somewhere around the world--to lift gold prices appreciably from where they are now.

As to other news, yesterday was a light day on the economic calendar, after a busy Tuesday. Now, there will be a somewhat active today and tomorrow from that perspective. With respect to the news so far this morning, the U.S. Commerce Department has just released revised first-quarter GDP figures, and the news, albeit not wholly unexpected, was still not very compelling, as the nation's economy posted a drop in output for the period of 1.0%. A slightly smaller pullback had been expected. Initially, the first-quarter GDP had been estimated to have risen by a scant 0.1%. In part, the biggest decline in three years was brought about by the long winter's effect on construction activity. Note that we will get a final read on GDP for the earlier quarter at the end of next month. As to the current period, we still see a snapback to the 3% range, or thereabouts. Also, weekly jobless claims plunged by 27,000, to 300,000 in the latest week. That was a better showing than had been expected and helped to blunt the GDP downward revision to a degree.

Finally, stocks in Asia pushed generally lower overnight, although in Tokyo, equities did manage to rise for a sixth session in a row. This gain in Japan's Nikkei came in spite of a larger drop in April retail sales in that country than had been generally expected. In the meantime, so far this morning, the principal bourses in Europe are somewhat weaker. Finally, over here, following yesterday's muted pullback, the futures are showing small gains, which were not blunted by the dispiriting first-quarter GDP figures cited above.   - Harvey S. Katz

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