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After The Close - The U.S. stock market traded sharply lower this morning, and was unable to reverse direction at all in the afternoon. At the close of the session, all of the major averages finished deep in negative territory, and at their lows for the day. The Dow Jones Industrial Average was down 394 points; the S&P 500 Index was off 53 points; and the NASDAQ was down 134 points. Today’s selling was widespread, as decliners outnumbered advancers by an overwhelming margin on the NYSE. Further, all of the major equity sectors lost considerable ground, with pronounced weakness in the energy and basic materials issues. The utility shares, which are largely held for income, also traded lower today.

There was just one economic report released this morning. Specifically, wholesale inventories were largely unchanged during the month of July. This reading was in keeping with the consensus forecast. Meanwhile, it should be noted that today traders were paying close attention to comments issued by Federal Reserve officials. Given that the domestic economy continues to show improvement, many on Wall Street are now concerned that the Fed will choose to hike interest rates in the coming months. The idea of higher rates definitely put a damper on sentiment today, and will likely be a key issue for traders for the remainder of the year.

Finally, in corporate news, a few companies issued their financial results. Among the widely followed names, shares of Kroger (KR) ended higher, even though the company posted mixed results and offered a somewhat soft outlook. In the M&A area, shares of Williams Companies (WMB) moved lower, in response to reports that a possible merger with Enterprise Products (EPD) has been derailed. - 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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2:20 PM EDT - After moving in a tight band for weeks, the stock market had broken out of that range in a big way today. And unfortunately for those long equities, the move has come on the downside--and it has not been pretty.

After opening sharply lower on growing fears of an imminent Federal Reserve-initiated interest rate increase, stocks have proceeded to fall even further, as hawkish comments from a normally dovish Fed voting member and a sharp drop in oil prices, following a 4% rebound yesterday, have combined to take the equity market dramatically lower.

In all, as we head into the final two hours of trading on this hot and muggy Friday afternoon down on Wall Street, the Dow Jones Industrial Average is now off by 322 points; the S&P 500 Index is lower by 44 points; and the NASDAQ is plunging by 115 points. Each of these three composites is currently off by more than two percent.

Losses, meantime, are all around, with the each of the 10 largest equity groups losing ground, and with eight of the 10 off by two percent or more, led down the losing path by the basic materials sector. Also, losing issues are overwhelming gaining stocks on the Big Board to the staggering tune of some 15 to 1. There is simply no place for the suddenly hard-pressed bulls to hide. And, we still have nearly two hours of the trading week still left.  - Harvey S. Katz

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

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12:05 PM EDT -  The major U.S. equity indexes started the session notably to the downside, with the Dow Jones Industrial Average off triple digits just minutes into trading, and the selling has intensified in the last hour. Prompting the selloff were some hawkish comments on interest rates from a traditionally dovish Federal Reserve leader and voting member earlier today (more below). That brought renewed sentiment that the central bank may act soon to tighten the monetary reins. And on a day when economic and earnings data are very light, the hawkish comments drew even greater attention, much to the dismay of the bulls.

Thus, as we pass the midday hour on the East Coast, the Dow 30, the tech-heavy NASDAQ, and the broader S&P 500 Index at session nadirs, with the Dow and S&P 500 Index suffering their biggest intra-day losses since June 27th. The selling has been broadbased, with profit taking in the small and mid-cap sectors, as well. There also is a plurality of declining issues on both the New York Stock Exchange and the NASDAQ. With these losses, the U.S. equity market is looking at a losing abbreviated trading week on Wall Street. (The market was closed on Monday for the Labor Day holiday.)

As noted, the big news that investors ran with this morning were comments from Boston Fed President Eric Rosengren, who said that a rate hike may be necessary to prevent certain sectors of the economy from overheating. Mr. Rosengren noted that he would back gradual interest-rate hikes, saying that waiting too long risks some asset markets, like commercial real estate, becoming “too ebullient.” Those comments from a normally dovish Fed leader raised sentiment that the lead bank seems intent on hiking rates even if the economic data continue to be uneven. In just the last week, we received two disconcerting reports on manufacturing and nonmanufacturing activity from the Institute for Supply Management, with the former category producing a reading below 50, which is indicative of a contracting sector. The hawkish comments, along with the weak economic data, emboldened the bears today.

Not surprisingly, all of the 10 major equity groups are trading in the red today, with the biggest laggards being the interest-sensitive sectors. The higher-yielding equities tend to perform poorly when sentiment grows that the rates on fixed-income securities may rise in the coming months—and that certainly is the case once again today. Conversely, on a relative basis, the financial sector is performing the best, with some buying interest in the banking stocks, which are fresh off of a strong showing in August. Talks of an interest-rate hike are helping the lending institutions, as the higher spreads are likely to have a positive impact on their net investment income.

Looking ahead to the remainder of the trading day, we think it would take a Herculean effort on the part of the bulls to turn the table on the bears. The bulls are up against hawkish monetary policy talk and a sharp drop in oil prices in both New York dealings and on the Continent. Such developments are making it look very likely that Wall Street is going to end the holiday-shortened weak on a dour note. Stay tuned. - 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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11:05 AM EDT - Concerns about a possible interest rate hike by the Federal Reserve (the lead bank will meet on September 20th and 21st) are shaking up the stock market this morning and sending prices skidding at this hour.

Thus, as we pass the 90-minute mark of the trading day, the Dow Jones Industrial Average is off 190 points; the S&P 500 Index is lower by 25 points; and the NASDAQ is down by 58 points. Each index is off by more than one percent. That is important as it has been more than 40 days since we have seen a move of this magnitude in one direction or the other.

The rest of the market is skidding as well, with the concerns on rates rising this morning after a noted dove on the Federal Reserve, Eric Rosengren, the Boston Fed President, advanced the case for an interest rate increase. - Harvey S. Katz

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

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Before The Bell - After a mostly mixed and inconclusive market session on Wednesday, which had been dominated by worries ahead of the 2:00 PM (EDT) release of the Federal Reserve's Beige Book, stocks opened up with no such indecision yesterday. In fact, the market started notably to the downside in the latest session, with the Dow Jones Industrial Average falling to a loss of some 70 points, taking most groups and the other major indexes down with it. The failure of the European Central Bank to extend the termination date of its quantitative easing program was a seemingly big factor in the early reversal. 

As to other influences, oil prices rose again, with a barrel of crude in New York climbing to well over $47. That surge helped mollify the bulls, but, obviously, not sufficiently to halt the aggressive early selling on Wall Street. Also of note, weekly jobless claims eased modestly, falling to 259,000. But the ECB decision was the major influence on early trading. The market has been range-bound for the most part in the past couple of months, with the S&P 500 Index, for example, having now gone more than 40 sessions without rising or falling by as much as one percent.

Following that halting start, the market sought to pare its losses, and did so with a degree of success as the morning ended, so that as we reached noon in New York, the averages were somewhat off of their session nadirs. On point, as we started the afternoon, the Dow was off about 40 points; the S&P 500 Index was lower by a handful of points; and the NASDAQ was down about 20 points. However, led by the strong energy group, six of the 10 leading equity groups were higher at mid-session, while gaining and losing stocks were about even on both the NYSE and the NASDAQ.

The afternoon then began with the market continuing to ebb and flow, but remaining range-bound, with the Dow's loss through mid-afternoon ranging from roughly 30 to 80 points. The S&P 500 Index and the NASDAQ, in particular, showed notable weakness, with the latter's pullback largely attributable to a selloff in the technology space, in particular shares of Apple (AAPL - Free Apple Stock Report), which declined by almost three points at the day's nadir. Losing issues were then nudging out gaining stocks on the NYSE, as most equity groups were in the red, led lower by the consumer sectors. 

The market sought to pare its losses further down the home stretch, and managed to do so for a time, with selective recoveries in certain equity categories helping to put some parts of the market on a firmer footing. But no wholesale comeback evolved as the leading averages all stayed under water, with weakness continuing in the consumer space, as Dow component NIKE (NKE - Free Nike Stock Report) saw its stock lose almost 3% on the day. The consumer issues have been pressured in recent days by pricing concerns and weak data in the nonmanufacturing sector. 

All told, the close saw the Dow still off by 46 points, the S&P 500 weaker by five points, and the NASDAQ in the red by 24 points. Weakness also was spread across the small- and mid-cap groups, while declining stocks narrowly edged out winning issues on the Big Board. It was a day for a still overbought stock market to settle in and essentially tread water. The market may continue in this vein for the next two weeks, as the Street prepares for the upcoming FOMC meeting, which is likely to see the Federal Reserve again hold the line on interest rates.

Looking out now to a new day, and after yesterday's inauspicious performance, the markets were lower overnight in Asia, as they are across Europe this morning, as the ECB decision continues to weigh on sentiment on the Continent. Also, worries about the Fed persist around the world ahead of speeches and commentary by a succession of central bank speakers in our country set for later today. So, our futures are selling off once more, with the S&P 500 Index futures now down almost 12 points in the pre-market hours. Thus, a second straight weak opening would appear at hand.   - Harvey S. Katz 

At the time of this article’s writing, the author held positions in one or more of the companies mentioned.