After the Close - The final day of what was a seesaw week of trading on Wall Street turned out to be a rather directionless one for the major U.S. equity indexes until late in the session (see below). We did not see much conviction on the part of traders, as the major averages never strayed too far in either direction from the neutral line—though, as noted, we did see a pickup in buying during the final hour. Today’s overall malaise was likely because there was little news from either the economic or earnings fronts that would be considered market moving. Too, it was relatively quiet on the international front, with the situation in Eastern Europe not providing any new drama heading into the weekend.

At the closing bell, all of the major U.S. equity averages were modestly higher, in a session that was mixed for most of the day before turning slightly positive in the final 90 minutes, helping the Dow Jones Industrial Average approached, but did not hit a new intra-day all-time high. Of note, advancing issues led decliners by a decent margin on the NASDAQ; the spread was a bit narrower on the NYSE. From a sector standpoint, the number of up and down arrows was split among the top-10 groups. There was some profit taking in the recently strong performing energy sector and the basic materials stocks were lower, with a good deal of the damage in that area coming from a poor showing by the steel issues.  The more defensive groups, including the utilities and telecommunications stocks, also were out of favor, as investors showed a bit more willingness to take on risk. Sticking with that theme, the small-cap stocks outperformed their large-cap brethren. In particular, the Russell 2000 led the way other the major averages after hitting a three-month low yesterday. We also witnessed some sector rotation into the recently volatile technology, healthcare, and consumer discretionary groups today.

Meantime, the fast-concluding first-quarter earnings season—90% of the S&P 500 companies have reported results—did not provide investors with any significant sector-moving releases today. But that is not to say we didn’t receive any interesting reports. In the aforementioned retailing space, shares of Ralph Lauren (RL) were weaker after the apparel company beat bottom-line expectations, but warned of a forthcoming margin hit. Likewise shares of Post Holdings (POST) fell sharply after the cereal maker reported a March-quarter loss and NVIDIA Corp (NVDA) stock was weaker on a downbeat quarterly report. Conversely, the stocks of Computer Sciences (CSC) and News Corp. (NWSA) were higher after reporting quarterly results and shares of the The Gap (GPS) got a nice boost from a positive April sales report. Next week, we will get some notable earnings results from the retailers, including Macy’s (M) and J.C. Penney’s (JCP), as well as Dow-30 components Cisco Systems (CSCO Free Cisco Stock Report) and Wal-Mart Stores (WMT Free Walmart Stock Report).

As noted, it was a very quiet day on the business beat, with the only report coming from the Commerce Department, which showed that wholesale inventories were up 1.1% sequentially in March. That report does not have much of any impact on trading, but we can’t say the same for a few releases coming next week. Investors will be keeping a close eye on data on retail sales, industrial production, and housing starts. Each one of those reports has the potential to move the market as these are notable snapshots on the three most important sectors of the economy (i.e., the consumer, housing, and manufacturing). – William G. Ferguson

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


12:10 PM EDT - The U.S. stock market is putting in a slightly weaker session today. But while the major averages are still in negative territory, they now seem to be finding some support. At just about noon in New York, the Dow Jones Industrial Average is essentially flat; the broader S&P 500 Index is down three points, as is the NASDAQ. Market breadth still suggests a slightly negative tone to the session, as decliners are outnumbering advancers on the NYSE. Most of the market sectors are trading lower, too. There is pronounced weakness in the energy and basic materials names. The technology stocks are off, as well. However, some relative strength can be found in select consumer issues. The healthcare sector is also attempting to buck the downtrend.

Technically, the stock market has had a directionless quality, with both the bulls and the bears lacking any real conviction. Yesterday, the NASDAQ advanced quite a bit at one point, but gave up much of those gains. This was not surprising, as in weak markets traders often sell into strength, creating failed or stalled rallies. Further, the Russell 2000, a small cap index, declined quite a bit yesterday, suggesting that there is little appetite for risk at this juncture. For now, it is not yet clear if a correction will unfold, or if the stock market will continue to move sideways, as it has been doing for the past several weeks.

Meanwhile, traders received limited economic news this morning. Notably, wholesale inventories rose 1.1% in March, more or less, meeting the consensus view. Traders generally do not react well to information vacuums, and the lack of economic news today has probably not helped matters.

Although the first-quarter earnings season is in its final stages, traders received a few corporate releases worth mentioning. Arcelor-Mittal (MT) shares are trading lower after the steel giant issued a mixed report. Ralph Lauren (RL) stock is slipping, as investors were disappointed with the apparel company’s report. In fact, that stock has hit a new 52-week low. Finally, Rocket Fuel (FUEL) shares are off sharply, after that company issued weaker-than-expected guidance.- 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 Survey Although earnings season is growing a bit long in the tooth, quarterly reports are still coming in at a steady pace. Early indications show that investors were pleased with financials and/or updates from media and entertainment company News Corp. (NWSA), energy drink maker Monster Beverage (MNST), hotel operator Hilton Worldwide (HLT), apparel and accessories retailer The Gap (GPS), and software developer Symantec (SYMC), as all of these equities are moving higher ahead of the bell. Conversely, media company CBS (CBS), apparel seller Ralph Lauren (RL), and biotech Jazz Pharmaceuticals (JAZZ) failed to impress Wall Street, and their stocks are down in the premarket, with JAZZ and RL showing considerable weakness. 

On the M&A front, advertising companies Omnicom Group (OMC) and Publicis have called off their proposed $35 billion merger, and OMC is down slightly ahead of the bell, as a result. Additionally, computer and personal electronics icon Apple (AAPL) is reportedly in talks to acquire headphone maker Beats Electronics for $3.2 billion. Apple shares are down marginally in pre-market trading. – Matthew E. Spencer, CFA

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

Before The Bell - Yesterday, in our morning review of the stock market, we observed that volatility was again on the rise. And cited as an example, the up-and-down pattern in place on Wednesday, when the leading averages gained at the outset, fell back later in the morning, and rebounded throughout the afternoon, to finally close generally in the black--save for the NASDAQ.

Then, a similar showing was put on yesterday, at least early in the latest session. To wit, stocks, after pausing momentarily, rose nicely early on, with the Dow Jones Industrial Average jumping to a late-morning gain of just over 100 points, while the NASDAQ pushed higher by better than 40 points, or almost one percent. It seemed as though we would have a strong day for a while. Here, sentiment had been boosted by some upbeat earnings metrics, a positive report on weekly jobless claims (issued an hour before the equity market opened), generally supportive comments by Federal Reserve Chair Janet Yellen, and dovish remarks from European Central Bank President Mario Draghi, who intoned that the ECB stood ready to act by next month should the need to counter very low inflation intensify as a problem.

However, those gains faded by mid-afternoon, in part, we think, because of some reappraisal of recently released earnings data, as some high-profile profit misses were mixed in with the aforementioned better metrics. Also, there may be concerns about the likely onset of deflation in Europe, and its potential to make a slight appearance on our shores. Moreover, in her comments, Ms. Yellen did express some concerns about the recent faltering of the housing market. (On point, most other sectors are now pressing higher as the spring thaw spreads, with the high-profile exception of housing. That exception, given its critical place in the total economic scheme of things, could weaken our mature business comeback going forward.)

Finally, there are the ever-present concerns about the tense international standoff between the East and the West over Ukraine. Although that situation did seem to cool down somewhat in mid-week, it retains the potential to heat up again at any point. The impact of this situation is more material from an economic standpoint is much greater with Europe, given the Continent's greater proximity and that region's much more material reliance on oil and gas from Russia.

So, with these modest worries in hand, the market continued to weaken into the late afternoon, with just some occasional buying on the dip. However, those buying periods excluded the NASDAQ, where the losses continued through the remainder of the session, with that composite finally closing off by 16 points. The Dow, however, after dipping into the red for a time, albeit never by all that much, edged back into the black by the close, gaining 32 points. The Standard and Poor's 500 Index, meantime, fell just modestly, shedding three points, while the Standard and Poor's Mid-Cap 400 eased by seven points and the small-cap Russell 2000 dropped 11 points, a notable setback of a full one percent.

Looking ahead to a new day and the conclusion of the first full week of May, we find that the markets are pressing lower thus far in Europe this morning, with equities in London, Paris, and Frankfurt down modestly. Equities are off more notably in Portugal. On the whole, it is a light day for news on our shores, with just data on wholesale inventories being of some note from an economic perspective. Next week, however, things heat up, with the data parade kicking off on Tuesday, when the Commerce Department issues its monthly data (for April) on retail sales. As to our markets, yesterday's softer close has invited more selling this morning, with the tech-laden NASDAQ futures particularly weak, showing a pre-market loss of more than nine points. The losses in the Dow and the S&P 500 futures are somewhat more contained.

Finally, even with the absence of hard economic news over here, the economy will still be on investor minds, as Dallas Federal Reserve President, Richard Fisher, a voting member of the FOMC this year, is expected to give his perspective on the economy and monetary policy later today. Such musings can be market moving. - Harvey S. Katz, CFA

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