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After The Close - The bears made it two consecutive days in the driver’s seat today, as the sellers were out from the get-go, emboldened by yesterday’s Federal Reserve release, a disappointing debt auction in Spain, and a solid, but slightly underwhelming, report on non-manufacturing activity. By the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index were 125, 46, and 14 points lower, respectively—though it was encouraging that the indexes did fight back in the last hour from their intra-day lows. Still, today’s selloff was all encompassing, with each of the 12 major sectors on the wrong side of the neutral line. Declining equities led advancers by a considerable margin on both the New York Stock Exchange and the NASDAQ.

As noted, the news from overseas, specifically from financially struggling Spain, was not very encouraging. Earlier this morning, Spain’s borrowing costs jumped at the country’s bond auctions. This, combined with recent data suggesting that the euro zone is in the midst of at least a mild recession, once again raised concerns about the area’s sovereign-debt problems, which had taken somewhat of a backseat in the minds of investors after Greece received its second bailout loan. The European bourses were under significant pressure, with declines of 2.8%, 2.7%, and 2.3% recorded by Germany’s DAX, France’s CAC-40, and London’s FTSE-100, respectively. And the worries on the Continent quickly found their way over to our market.

The U.S. equity market was under selling pressure from the opening bell. The aforementioned European worries, along with the Federal Reserve’s comments that another round of monetary stimulus is unlikely and the latest report on non-manufacturing, gave investors a few reasons to head for the exits in an equity market that we have been saying is clearly overbought. The latest report from the Institute for Supply Management on the services sector was mixed. Although the survey came in at 56.0, which indicates that activity is expanding, it was a somewhat lesser rate than had been forecast and the lowest reading since December.  This survey is closely watched, as the services sector accounts for roughly two-thirds of the nation’s economic output. Not surprisingly, the consumer cyclical sector was among the biggest laggards today.

However, the stocks of consumer cyclical companies were not alone in their misery today. Other areas that struggled mightily in the latest session were basic materials, technology, and energy. The retreat in energy prices (crude oil futures fell nearly 2% on the New York Mercantile exchange) weighed on the sector. Within the basic materials group, mining and metals stocks, which have been under pressure in recent trading sessions, were weak once again, with notable declines in the shares of Newmont Mining (NEM), Barrick Gold (ABX), and Goldcorp (GG).

Meanwhile, oil was not the only commodity under pressure. In fact, the price of the other most closely watched commodity, gold, was down more than $50 an ounce (or 3%). Other notable decliners were the contracts for cattle, cotton, cocoa, coffee, and orange juice. The strength of the dollar, which makes commodities more expensive in overseas markets, may have had something to do with this weakness.

For the first time in many trading session, market actions suggested an elevated level of skittishness among investors. The S&P 500 Volatility Index (VIX) jumped roughly 5% today, and investors gobbled up fixed-income securities at a greater rate, as the yield on the 10-year Treasury note, which moves in the opposite direction to the price, fell four basis points. Whether or not the rate and market declines continue in the forthcoming days will probably depend on Friday’s reports on employment and unemployment, and the happenings in Spain, which could be another headache for its euro-zone neighbors. – 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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12:30 PM ET - The U.S. stock market is sharply lower today. Once again, a weak session in Europe is doing little to help the situation. The major bourses opened lower, and are set to close far into negative territory. France’s CAC-40 is off almost 3%, with sharp losses also in Britain’s FTSE-100 and in Germany’s DAX. Just as investors were digesting some disappointing manufacturing reports in Europe today, a weak debt auction in Spain, accompanied by rising yields, suggests that investors are not convinced that all is well on the Continent. The euro is off sharply at $1.31. This currency, which has become a measure of Europe’s economic health, has been quite volatile over the past year reaching a high of $1.43, and a low of $1.26.

The economic news in the United States also did little to help matters. This morning, the ADP Employment Change report showed 209,000 private-sector jobs added in the month of March. This was largely in line with the figure analysts had been expecting. Later, the Institute for Supply Management reported a reading of 56.0 on its non- manufacturing index for March. This was lower than the February figure and below the consensus view of 57.0.

Elsewhere, traders may have a mixed take on the latest Fed summation, which suggested that the economy is now on better footing and the extremely loose monetary policy, and rounds of asset purchases, may not be needed. Notably, Wall Street’s investment program reflects low borrowing costs and easy access to capital, as much as it does the health of the overall economy, and the corporate outlook. So this news may be a disappointment to some.

As we pass the noon hour in New York, the markets are coming off their worst levels of the session. However, the Dow Jones Industrial Average is still off 143 points (-1.1%); the S&P 500 Index is lower by 15 points (-1.1%); and the NASDAQ is down 50 points (-1.6%).  Market breadth is sharply negative with decliners are outnumbering advancers by roughly 6-to-1on the NYSE. 

The important basic materials sector is leading the market lower. This reflects a weak day for commodities. Metals prices are off sharply, with notable losses in copper and gold. Oil is also down over 2%, at $102 a barrel. The technology sector is a big decliner, too, with the Philadelphia Semiconductor Index off over 2%. There is some relative strength in the transportation stocks and in the utility issues – which have been lagging heretofore.

It is probably too early to tell if today’s selloff, which follows some weakness yesterday, will usher in a full-blown correction. Given the run-up the market has staged over the past several months, a 5%-10% correction, which is normal during bull markets, is not out of order. However, the buy-the-dip crowd can still move in, as it has in the past, and prop up the market. -Adam Rosner

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

11:00 AM ET - The profit takers are out on Wall Street today, and in some force, unlike yesterday when the sellers were much more subdued and selective. As noted, the profit takers had moved in during the day yesterday, with modest early losses. The selling then picked up after the minutes of the March 13th FOMC meeting were released. That summation played down the chances for another round of quantitative easing, suggesting that the nation's economy was acting too well for that potentially inflationary effort to take hold.

By the close yesterday, the Dow Jones Industrial Average had ticked down by 65 points, paring a late 130-point loss, in the process. However, the other averages gave proportionately less ground. Now, this morning, a poor debt auction in Spain, further angst about the pace of economic growth in the troubled euro zone, and further uneasiness about the prospective monetary policies of the U.S. Federal Reserve combined to send the European bourses notably lower in trading earlier today, and to get our own market off to a weaker start. Indeed, after a half hour of trading, the Dow was off by about a hundred points.

Then, at 10:00 (EDT), the Institute for Supply Management, the Tempe, Arizona-based trade group reported a decent, but clearly underwhelming, report on non-manufacturing activity across the country in March. That data point came in at 56.0--some six points above the divide between contraction and expansion in the services sector. However, the metric was a point below the expected 57.0 reading and 1.3 points below the 57.3 score achieved in February. That slightly disappointing news hit the market hard, and minutes after the survey's issuance, the Dow had sold off to a loss of about 175 points, or just below the 167-point now in place. Also, the NASDAQ, which eased by just over a handful of points yesterday is down by 53 points now and the S&P 500 Index is off by some 18 points. The small- and-mid-cap indexes are also suffering deep setbacks at this hour.

In truth, the non-manufacturing and FOMC tidings were not all that bad. In fact, the Fed's reluctance to ease further is a good sign, as it suggests that the economy is doing somewhat better than earlier in the year. In our view, the market is overbought and looking for any excuse to sell off, at least modestly and in the short run. Indicative of the current more cautious mood is the gain this morning in the VIX volatility index, which is up nearly two points, to 17.45.   - 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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Stocks to Watch from The SurveyThe stock of homebuilder Hovnanian Enterprises (HOV) is lower in the premarket on news that the company plans to sell 25 million shares to help repay debt.

SanDisk (SNDK), a developer of flash memory technology, has trimmed its first-quarter sales guidance due to weaker-than-anticipated demand and pricing. Margins during the period probably came in lower than management’s previous forecast, as well. The stock is down in premarket trading.

Chemical company Monsanto (MON) has reported solid financial results this morning, sending its shares up modestly in the premarket. Retailers Bed Bath & Beyond (BBBY) and PriceSmart (PSMT), as well as restaurant Ruby Tuesday (RT), are some of the companies scheduled to report quarterly results after the market closes today. – Matthew E. Spencer

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 - The profit takers, it would appear, are back in the fray, at least for the moment. That point was underscored yesterday and likely will be in evidence again this morning at the opening of the trading day in about a half hour from now. Specifically, after the stock market had been rallying over the past couple of months to a succession of higher highs, equities stepped back a bit yesterday morning, in the absence of hard economic news that could have possibly propelled stocks still higher.

Equities then held in modestly lower ground until just after 2PM (EDT). At that time, the Federal Reserve released the minutes of its March 13th Federal Open Market Committee (FOMC) meeting. At the prior confab in January, the Fed had noted that several of its participants had voiced approval for some sort of additional monetary easing, a possible QE3, if you will. At the latest meeting, the several board members were reduced to just a couple of governors, thereby lessening the chances for another round of easing. The bulls had been euphoric earlier at the prospect for further stimulus; now, they were less than giddy, and stocks quickly sold off, taking the Dow, an earlier 50-point, or so, loser, down to a late afternoon loss of some 130 points, before some late buying pared that deficit in half.

In truth, though, there was never a real rout during the session, as the Standard and Poor's 500 Index and the NASDAQ were just minor casualties throughout, finally losing just over a handful of points each on the day, largely because of one stock, Apple Inc. (AAPL), the current tech starlet, which has surged past $600 a share in recent days. That stellar issue finally crested at just over $630 during the day. With that stock, now the largest market-cap issue in the nation, exerting a disproportionately large influence, the NASDAQ and the S&P, which domicile this stock, were off just slightly.

Meanwhile, the carryover effect from the Federal Reserve's minutes, a poor debt issue in beleaguered Spain, and weak economic fundamentals across the euro zone are putting pressure on equities in Europe this morning, with rather large losses now being suffered by all of the principal bourses. The spillover to our shores also is notable, with the S&P futures now off by a dozen points and the NASDAQ futures lower by 22 points. Even Apple shares are indicated more than a handful of points lower at the open. One has to wonder what psychological effect there would be on the bulls in the event of some serious profit taking in that issue--as will inevitably take hold at some point.

As for news from over here, ADP (ADP) earlier this morning released results of its private-sector payroll survey for March showing the addition of 209,000 jobs; that was a bit better than the 200,000 private-sector positions that had been the consensus forecast. This report will be followed up at 10:00 AM (EDT) by data from the Institute for Supply Management on non-manufacturing activity. A further expansion in that pivotal economic category is anticipated. Finally, on Friday, notwithstanding the Good Friday observance, the government will be issuing its non-farm payroll and unemployment figures for last month. Estimates are that about 210,000 payrolls were added in March, while the jobless rate is forecast to have leveled off at 8.3%.

Overall, the news has been quite good on our shores, and the odds are that the mild recession forecast for the euro zone this year will not spill over to our nation. Still, we are in an overbought market at this time, and just the hint of some disquieting news could take stocks down notably. This presumptive early selloff today might not be the start of something bigger, but it will bear watching nonetheless, especially with the market now somewhat frothy. – Harvey S. Katz

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