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After The Close - The U.S. stock market drifted sharply lower this morning, but managed to reverse itself, at least partially, by the end of the session. The fact that bargain hunters were willing to step in and scoop up battered stocks was encouraging. At one point today, the S&P 500 Index tested the critical 1,300 level, but fortunately found some support there. Importantly, the 1,300 area, which is about 8.5% off the recent market high, marks the low point of the correction that started in early May.

At the end of the day in New York, the Dow Jones Industrial Average ended off 26 points (-0.2%) after having rallied from a loss of about 100 points to a gain of 70 points; the S&P 500 Index lost three points (-0.2%); and the NASDAQ was down 10 points (-0.4%). At the end of day, Market breadth was not too bad, as declining stocks were roughly even with advancers on the NYSE. The major market sectors were mixed. There was some leadership in the transportation, financial, and utility sectors. However, there was notable weakness in the basic materials and capital goods issues.

Once again the precarious situation in Europe probably played a leading role again today. Concerns over Spain’s banking system seemed to be mounting, and reports that the International Monetary Fund would be willing to lend support, may well have helped the markets in the United States turn around. Unfortunately, the global markets have been moving up and down, as news stories come out of Europe. This has given current market conditions a tenuous, and often insubstantial, quality.

Elsewhere, the economic reports in the U.S. did little to impress traders. Initial weekly jobless claims came in higher than many had expected, and also exceeded the prior week’s reading.  Also, the second estimate of first-quarter GDP came in at 1.9%, which was short of the initial expectation.  Moreover, to top off the day’s weak reports, traders also received a lackluster Chicago PMI reading.  Tomorrow, we get a look at the government’s non-farm payrolls report for May. Notably, unlike some of the recent economic releases, this issuance is very widely watched and can easily move the market.

On the corporate front, shares of Joy Global (JOY) headed lower after the mining equipment maker reduced its guidance. Telecom company Ciena (CIEN) stock was higher, after that company posted a stronger–than–hoped for quarterly report. Recent IPO Facebook (FB) rallied today, attempting to cross back above the $30 mark ending at just below that figure – 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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12:15 PM ET - Investors will be glad to put the month of May behind them, as stocks are under pressure again on some less-than-uplifting economic data and as Europe’s woes continue to loom large.

The month began with the Dow Jones Industrial Average at 13,214, and that index now stands at 12,372, representing a 6.4% correction. The NASDAQ, too, has felt the weight of the downturn, giving up a sizable portion of the big gains it posted early in the year. Just past the noon hour on the East Coast, the Dow and the NASDAQ are off 48 points and 24 points, respectively. Market breadth is decidedly negative, with about four stocks falling for every one rising on the New York Stock Exchange.

Stocks rallied earlier in 2012 when the economic data were coming in stronger than expected, but that has been not so much the case lately. Today’s statistics maintained the more moderate tone that has characterized recent business activity. For instance, Automatic Data Processing (ADP) reported this morning that 133,000 private sector jobs were added in May. That represents a modest level of growth, but not enough to excite stock market investors. Some deceleration in the Chicago Purchasing Managers’ Index and a report showing that first-quarter GDP advanced a slim 1.9% seemed to undermine sentiment, as well.

But while the day’s business news isn’t particularly enticing, there are still a couple of positives to take away. One is that the U.S. economy continues to expand, even if it is not on a fast track. A 1.9% annualized growth rate for a $15 trillion economy would produce an added $285 billion in goods and services. A $285 billion economy, by itself, would rank 36th in the world, ironically just behind the size of Greece’s GDP. It could be that steady, underlying growth in the domestic economy, if sustained, might lead to a bounce-back in stocks once the situation in Europe finally settles down.  

Another plus is that the shift into government bonds continues to push mortgage rates to all-time lows. U.S. government agency Freddie Mac today reported that the rate for a 30-year mortgage fell to 3.75%, while the rate for a 15-year mortgage dropped to 2.97%. These ultra-low low rates are helping the housing market get back on its feet after a deep slump in that sector.

For now, though, the gloom may not be ready to lift just yet. Cyclical sectors dependent upon economic growth, including shares of industrial, materials, and energy companies, are feeling the brunt of the day’s selling pressure. But there is relative strength in the utilities. Shares of Con Edison (ED) are trading higher, for example. - Robert Mitkowski

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

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Stocks to Watch from The SurveyLess than a week ago, Talbots (TLB) announced that it had failed to strike a deal to be acquired by private-equity firm Sycamore Partners, causing its stock to tumble. Now, in a surprise reversal, the women’s apparel retailer has found common ground with Sycamore, which plans to buy the company for $2.75 a share, well below its previous offer of $3.05. Talbots stock soared in pre-market trading on the news.

Athletic footwear and apparel giant Nike (NKE) intends to sell two of its non-core brands, Cole Haan and Umbro, to focus on the core Nike brand, as well as Jordan, Hurley, and Converse.

In earnings news, shares of Lions Gate (LGF) are down in the premarket after the entertainment company announced weaker-than-expected March-period results. On the other hand, telecommunications equipment company Ciena Corp. (CIEN) reported stronger-than-anticipated April-quarter figures, causing that stock to rise in the premarket. – 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 -  Volatility, one of the more feared words on Wall Street, remains on the march, and with dour consequences for investor confidence. Specifically, as market volatility rises, as it has been doing all month, investors lose their will to trade and invest, as they fear sharp and sudden reversals that can wipe out accumulated gains in a matter of days or hours--or even less. 

That, in fact, is what has transpired in recent weeks--and especially over the past two sessions. Thus, one day after equities roared ahead on optimism about the U.S. economy and upcoming data, with the Dow Jones Industrial Average soaring by 126 points, that same 30-stock composite of blue chip companies fell back 161 points yesterday. Behind this latest reversal were further concerns about the increasingly troubled outlook in the euro zone. Now, for example, in addition to Greece and its woes, bond yields are soaring in Spain (reaching almost 7% on the 10-year government note) and in Italy (passing the 6% mark on similar securities).

And, as if Europe's woes were not enough, the U.S. Conference Board yesterday morning released its Consumer Confidence survey for May showing a sharp drop from the prior month. That one-two punch sent the bulls running for cover and stocks down sharply. All told, the merry month of May has seen the Dow fall 6%, thereby erasing all but a mere 1.7% of the year's advance in that index. The other averages have sold off as well, all but erasing the gains for the year on the Dow Transports, and pushing the NYSE Composite nominally in the red for the first five months of the year with one day remaining.

Now, we are facing the prospect of a series of key U.S. data releases over the next few days, starting with this morning's downward revision of the estimated first-quarter gross domestic product. That figure, initially forecast at a 2.2% growth rate has been revised to show an increase of just 1.9%. At the same time, first-time jobless claims have again risen, this time by 10.000 in the latest week. Also, some 15 minutes before the release of these reports, Automatic Data Processing (ADP) issued its estimate of private-sector jobs created for May and that number--expected to have been in the range of 150,000--instead came in at just 133,000.

Looking ahead to tomorrow, we will get a pair of critical reports. First, an hour before the stock market opens for trading, the U.S. Labor Department will release its May payroll report, where the expectations are that the nation added 150,000 jobs in the latest month. Forecasts also are that the unemployment rate held steady at 8.1%. We will see tomorrow if the aforementioned weak ADP number is a harbinger of things to come on the U.S. jobs front. At the same time, the government also will issue data on personal income and consumer spending. Then, 30 minutes after the start of the trading day, the Institute for Supply Management will release its survey on manufacturing activity across the country in May. A lesser rate of growth is expected to be reported at that time. 

As for the day ahead, the European bourses are rallying this morning, following days of more or less unrelenting losses. Still, the averages over there are closing out what will almost certainly be their worst month since last August. Our equity futures, too, are heading a tad higher at this hour, presaging a slightly positive opening to the trading day when it commences in less than an hour from now.  – Harvey S. Katz

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