After the Close - Volatility was the name of the game on Wall Street today, especially during the second half of the session. Specifically, after the release of the minutes from last month’s Federal Open Market Committee (FOMC) meeting, the bears were emboldened, as the summary (more below) spoke of the growing concerns the lead bank has right now about the domestic economy. A spate of selling followed the report. However, in the last half hour of trading some bargain hunters came back into the market and the overall damage was not quite as bad as it looked like it might be—the S&P 500 Index finished the session nearly unchanged, despite a negative bias to trading, and the earlier setback on the Dow Jones Industrial Average was reduced significantly by the closing bell. Nevertheless, declining issues still held a slight edge over advancers on both the New York Stock Exchange and the NASDAQ.

We did get some news on the economy after a few quiet days. In addition to the aforementioned minutes, we received a decent report from the Commerce Department on the international trade gap. All told, data showed that the nation's trade gap, the difference between the value of what this country imports and what it exports, fell modestly in May, dropping from an upwardly revised $50.6 billion in April, to the May deficit of $48.7 billion. The May deficit was in line with expectations, with the moderate narrowing in the imbalance largely the result of falling oil prices during that month. However, the economic news that had the biggest impact on the psyche of investors was the Fed’s minutes. The report showed that Fed officials are worried that the struggling U.S. economy could worsen if Congress fails to avert tax hikes and across-the-board spending cuts that kick in at the end of the year. The central bank also expressed concerns that Europe's sovereign-debt crisis will weigh on U.S. growth. The dour outlook, along with an indication that the lead bank would like to avoid another round of stimulus, initially jilted traders and produced a stretch of selling on Wall Street driving the Dow down by some 115 points at the day’s low. Investors should note that Fed Chairman Ben Bernanke could offer some indication of the Fed's plans next week when he delivers testimony before Congress.

Not surprisingly, stocks in those sectors most closely tied to the performance of the global economy were quite volatile today. Finishing in negative territory were the consumer cyclical, industrial and technology groups. The major technology names, including heavyweights Google (GOOG), Apple (AAPL), and Microsoft (MSFT) were weaker again today—though Hewlett-Packard (HPQ) showed some strength in the latest session. Meanwhile, the dour news on the economy did not hurt oil, as crude prices finished more than 2% higher on the New York Mercantile Exchange.

The news from other side of the Atlantic once again centered on the euro zone’s sovereign-debt problems. Earlier today, we learned that euro-zone finance chiefs agreed to give Spain an extra year to cut its budget deficit to 3%. Meantime, European Central Bank (ECB) President Mario Draghi left the door open to a further cut in the region’s interest rates if economic conditions were to worsen. The major European bourses finished the day mixed, with France’s CAC-40 falling 0.6% and Germany’s DAX registering a nominal gain of 0.2%.

Looking ahead, tomorrow will not bring much news on the domestic earnings and economic fronts, save for the latest report on weekly initial unemployment claims. That will change on Friday when banking giant JPMorgan Chase (JPM Free JPMorgan Stock Report) releases its latest quarterly results. The final day of the trading week will also bring news on producer (wholesale) prices for the month of June and consumer sentiment.  - William G. Ferguson

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


3:00 PM ET -  The stock market appears to be in the midst of another mid-afternoon meltdown--its second in two days. Indeed, after inching ahead very early this morning, and then staying in a modestly lower range through midday, the leading averages are now pressing notably lower, with the principal catalyst being a disquieting issuance from the Federal Reserve.

Specifically, the minutes of the central bank's June 30th FOMC meeting noted that most Fed policy makers agreed last month that they may need to take more definitive action to support growth if the U.S. economy loses further momentum.

The lead bank noted also that the economy could, in fact, weaken if Congress fails to avert tax hikes and across-the-board spending cuts that automatically would kick in at the end of this year unless remedial action is taken. With this in mind, the bank lowered its growth targets for 2012 recently. The poor job creation report issued last Friday and further slowdowns in consumer spending, which were highlighted by some unimpressive chain store sales results issued earlier this month underscore this concern.

Thus, as we near the one-hour mark left in the trading day, we find that the Dow Jones Industrial Average is now off by 100 points and the tech-heavy NASDAQ is in the red by 30 points. The small- and mid-cap indexes are likewise shedding red ink and the plurality of losing stocks over winning issues is increasing.

We saw similar action, as noted, during yesterday's session, and should the indexes close today's trading in the minus column, it would make a handful of losing sessions in a row for the averages, with the Standard and Poor's 500 Index now just at the 50-day moving average at 1,335. The Dow, meantime, has broken through the 50-day moving average, and by a fair margin with the aforementioned 100-point setback thus far today.  - Harvey S. Katz

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


12:30 PM ET - The U.S. stock market is somewhat weaker this morning, as investors await an important economic release. Specifically, at roughly 2:00 PM EDT the FOMC is set to release the minutes from its June meeting. Traders will likely be digesting the news to assess the overall health of the economy, as well as gain insight into the Fed’s monetary policy. Maneuvers by the Fed have included two rounds of quantitative easing, as well as some targeted asset purchases dubbed “Operation Twist”. Meanwhile, earlier today traders largely overlooked some decent economic news. According to the Commerce Department, the nation’s trade deficit narrowed to $48.7 billion in May, which was a modest improvement from the $50.6 billion deficit posted in April. Reduced petroleum prices were given as the primary cause of the lower figure. Wholesale Inventories rose 0.3% in May, which largely matched expectations.

Meanwhile, the corporate news has been quiet. OCZ Technology (OCZ) shares were trading sharply lower, after the disk drive and component manufacturer posted a wider-than-expected loss for the quarter. Meanwhile, Adtran (ADTN) stock is also sinking after the technology company posted weak results, and issued a cautious outlook. Things should heat up as earnings reports start to stream in with force over the next few weeks. Traders will be looking to the results and more importantly to the full-year forecasts for direction. Notably, banking giant JPMorgan Chase (JPM - Free JPMorgan Stock Report) is set to report its results at the end of the week.

At just past noon, the Dow Jones Industrial Average is off 26 points (-0.2%); the S&P 500 Index is ahead by one point; and the NASDAQ is down 14 points (-0.5%). The tone is mixed, as advancers are just about even with declining issues on the NYSE. In a reversal from yesterday, there is some leadership in the energy and financial names. However, the capital goods and consumer stocks are slipping.

Technically, the recent pullback in the S&P 500 Index has brought it close to its 50-day moving average located at 1,336. Hopefully, we will see some support start to materialize in this range. Trading volumes have been light over the last few days, suggesting that the selling has been limited. The VIX is down a bit today, at just over 18, which suggests that bullish sentiment is still intact for now. - 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 – The earnings calendar is rather light today, although investors did receive quarterly results from ADTRAN (ADTN). The designer, developer, and manufacturer of high-speed digital transmission products for telephones has reported weaker-than-anticipated second-quarter results, and the stock is lower in pre-market trading as a result. The stock of Goldcorp (GG) is also down in the premarket, after the precious metals company cut its 2012 production outlook. On a brighter note, shares of Abercrombie & Fitch (ANF) are up nicely in the premarket, likely on newspaper reports that the teen apparel retailer may increase its share-repurchase authorization and slow its expansion in Europe. Finally, office equipment maker Xerox (XRX) has agreed to pay an undisclosed amount for WDS, a U.K-based company with roughly 2,000 employees that specializes in support and consulting for wireless telecommunications companies. – Matthew E. Spencer

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


Before The Bell - The bears made it four losing sessions in a row yesterday, as a succession of profit warnings issued just as second-quarter earnings season is getting under way evoked fresh worries that the nation's business expansion is hurting anew and that this deceleration in growth would limit the corporate world's profit improvement. A breakeven result from aluminum maker Alcoa (AAFree Alcoa Stock Report) released just after the stock market had closed on Monday afternoon, and some ratings and profit downgrades among brokerage houses of that Dow-30 stock did not help matters.

Meanwhile, there are still intense worries in the euro zone, even as bond yields in Spain and Italy have come a bit off of their highest levels in months. Still, the high yields suggest that additional problems continue to fester in that financially challenged region. As for Spain, news yesterday was released noting that this struggling nation would be forced to give up most of the control over its banks to European institutions, among other measures, in exchange for a bailout. Also, Germany's top court resisted calls for it to speed up its decision on whether the euro zone's latest curative efforts would be consistent with that country's constitution.

And back on our shores, in addition to Alcoa's pedestrian bottom-line report and underwhelming outlook, we saw a reduction in the struggling chipmaker Advanced Micro Device's (AMD) second-quarter sales forecast. That stock fell notably, closing off 11%, to a penny under $5.00 a share. Likewise hurting the tech group, was a lowered revenue forecast from Applied Materials (AMAT), the semi-conductor capital goods manufacturer. Applied shares fell back as well. Unlike Advanced Micro, which is a smaller player in the semiconductor space, Applied is a very large factor in the chipmaking equipment area. A dour projection from quality truck maker Cummins Inc. (CMI) caused that stock to tumble yesterday, as well.

In the meantime, there seems to be little of note that would spark much buying at the outset of trading this morning. The European bourses, for example, are largely in the red; Italy's Prime Minister has suggested that his nation might have to dip into Europe's stability fund; and there are no major profit reports on tap that might wake up the slumbering bulls.

On a somewhat brighter note, our nation's trade gap narrowed somewhat in May, falling from April's upwardly revised deficit of $50.6 billion to $48.7 billion in May. Falling oil prices were largely the reason for the reduced shortfall. However, this news has not lit much a fire under the equity futures this morning, as they are just slightly in the black with about a half hour to go before the start of the new trading day. Perhaps the issuance this afternoon of the Federal Reserve's minutes from its last FOMC meeting will awaken the bulls. Absent some suggestion that a new round of quantitative easing might be in the cards, though, it is unlikely that much excitement will be engendered by that pending release. In the meanwhile, the bulls will likely struggle to regain their momentum this morning. Stay tuned. – Harvey S. Katz

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