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After The Close - The U.S. stock market opened higher this morning, but lost ground in the afternoon. At the end of the session, the Dow Jones Industrial Average was off 32 points (-0.3%); the S&P 500 Index was down four points (-0.3%); and the NASDAQ had surrendered 19 points (-0.7%). Market breadth showed a slightly negative bias to the session, as declining stocks were just ahead of advancing issues on the NYSE. Most of the market sectors traded lower, with losses in the transportation and capital goods stocks. In contrast, there was some strength in the energy and certain consumer names.

Technically, the S&P 500 Index seems to be taking a pause, as traders digest the large up move made a couple of days ago. In fact, the market has held up relatively well, all things considered, and some consolidation is not unreasonable.

The economic news was somewhat mixed today. We started out with an encouraging report on the employment front. Automatic Data Processing’s (ADP) Employment Change report indicated that 163,000 private sector jobs were added in July, which was far better than the 125,000 jobs analysts had been anticipating.  However, this issuance was followed by some less impressive items.  Specifically, The Institute for Supply Management’s (ISM) Index for July provided a reading of 49.8, which was just short of the consensus view.  Also, according to the Commerce Department, construction spending rose only 0.4% in June, which was a bit less than many had expected. Tomorrow, we get a look at the employment situation again, as the weekly initial and continuing jobless claims figures are released.  We also receive a factory orders report for June, which will help shed light on the broader economy. Then, on Friday, all eyes will be on the government’s employment report for July.

Meanwhile, the market reacted with some weakness this afternoon after the FOMC concluded its meeting. As expected, the Fed left interest rates unchanged, and indicated that they will remain low through 2014 in an effort to stimulate the economy. Nonetheless, there may have been some traders who expected a more aggressive approach, including another round of asset purchases. Meanwhile, on the Continent, the markets will be awaiting news from the ECB on Thursday. Expectations there may be unclear, after some aggressive statements from the ECB President.

Finally, corporate reports continue to play a large role in the markets here in the United States. Shares of Frontier Communications (FTR) were sharply higher, after the telecom company put out better-than-anticipated results. Shares of Knight Capital (KCG) were sharply lower after the trading company reported an error that caused unwarranted volatility in numerous stocks. In media, we heard from Time Warner (TWX). That stock headed a bit higher, after posting mixed figures. In finance, Mastercard (MA) stock dipped on a mixed report.   - 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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12:00 PM ET - The major U.S. equity indexes moved higher at the start of trading today, but as the morning progressed each eased off of the earlier highs, with some selective selling likely prompted by a weaker-than-expected report on U.S. manufacturing activity (more below). All in all, the scope of activity in the market remains erratic and rather muted ahead of today’s much-anticipated announcement from the Federal Reserve at just after 2:00 P.M. (EDT).

Thus, as we reach the midday hour on the East Coast, the Dow Jones Industrial Average and the broader S&P 500 Index are only up modestly, while the NASDAQ is now sitting slightly in the red. The losses thus far for the small-cap Russell 2000 and the S&P Mid-Cap 400 Index are a bit more pronounced. Still, the overall margin between advancing and declining issues on both the Big Board and the NASDAQ is pretty thin, an indication that investors are hesitant to make any major moves in either direction until the FOMC announcement. Meanwhile, as trading nears the finish line on the Continent, the major European bourses are mixed, with nice gains in Germany’s DAX and London’s FTSE-100 being met by a modest pullback in the France’s CAC-40. Much like trading in recent days over here, European investors are taking a wait-and-see approach ahead of the European Central Bank’s monetary policy meeting, which kicked off today. The local economic news was not all bad, though, as payroll processor Automatic Data Processing (ADP) reported that private-sector hiring was better than expected last month. 

Turning back to the U.S., the big news came from the economy. At 10:00 A.M. (EDT), the Institute for Supply Management reported that manufacturing activity for the month of July had weakened. The latest Manufacturing PMI came in at 49.8, slightly below the consensus expectation and relatively unchanged from June’s reading. A reading of 50 is the threshold that separates contraction from expansion, so the latest data were a bit disconcerting. Overnight, Japan, the world’s third-largest economy, also posted a manufacturing score below 50, suggesting continuing troubles for that nation. China’s PMI reading of 50.1 for July, down from 50.2 in the prior month, was also underwhelming. Not surprisingly, those sectors most closely tied to the health of the global economy are in the red today—though the energy group is bucking the trend thus far.

Meanwhile, we did get some more earnings news from Corporate America this morning. Of note, Allstate (ALL) handily beat earnings expectations in the latest quarter, though revenues were down slightly. The stock of the insurance company is joined in positive territory by shares of Silicon Image (SIMG), Papa John’s (PZZA), Genworth (GEN), and Phillips 66 (PSX), all of which are higher on positive quarterly results. Conversely, the stocks of Mastercard (MA) and Marathon Oil (MRO) were weaker after both delivered disappointing news before the market opened.

Looking ahead to the second half of the trading day, investors will be closely monitoring the Federal Reserve’s latest monetary policy decision. Our sense is that some additional quantitative easing (i.e., bond buying) will enacted by the lead bank. Will it be what the investment community wants to hear? The answer to that question is likely to influence the direction of trading over the final two hours of the session.   -  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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Stocks to Watch from The Survey Earnings news continues to dominate the non-Federal Reserve Board headlines. Some of today’s most notable reports come from apparel company True Religion (TRLG) and e-commerce and marketing solutions provider Digital River (DRIV). Both operators have reported second-quarter earnings and outlooks that disappointed investors, who proceeded to bid the two stocks sharply lower in pre-market trading. Other issues indicating lower openings because of earnings-related news include film studio Dreamworks Animation (DWA), education services provider Career Education (CECO), and cosmetics company Avon Products (AVP). On the other hand, shares of Silicon Image (SIMG) are soaring in the premarket, after the entertainment technology outfit released better-than-expected second-quarter financials and guidance. Shares of pizza chain Papa John’s (PZZA), insurance and financial services provider Genworth (GEN), and downstream energy company Phillips 66 (PSX) are trading nicely higher in the premarket, as well.

Additionally, the stock of Laboratory Corp. of America (LH) is up sharply in early morning trading, apparently on speculation that the independent clinical lab may be a takeover target. This news comes a day after the stock of Dun & Bradstreet (DNB) spiked, likely the result of reports indicating that the provider of information services is looking for potential suitors. – 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 stock market eased back modestly yesterday, with a late selloff turning what had been an indecisive day into a generally lower one, as, apparently, nervous investors did not want to take any further positions pending the outcome of the two-day Federal Open Market Committee meeting, which is set to conclude early this afternoon. The overwhelming consensus is that the Federal Reserve will decide to implement further monetary easing maneuvers at that time in the hopes of adding some life to a now-slumbering domestic economy. The guessing is that the central bank will opt for a new bond buying program, in the form of further quantitative easing.

At the close of trading yesterday, meanwhile, the Dow Jones Industrial Average was off by 64 points and the tech-heavy NASDAQ, which was boosted by another strong gain in the shares of Apple (AAPL), falling just six points. The small- and-mid-cap stocks did somewhat worse, proportionately, as the Standard and Poor's Mid-Cap 400 Index shed six points, or nearly two-thirds of a percentage point, while the small-cap Russell 2000 lost almost five points or 0.6%. By comparison, the NASDAQ's loss was 0.2%.

Overall, though, July turned into a fairly good month for equities, with the Dow adding 1% for the month. It was the blue chip index's ninth gain in the past 10 months, signaling that the bull market is alive and well, even if it has sometimes had a frayed look about it as it grows long in the tooth. The Standard and Poor's 500 Index rose 1.3% in July, while the NASDAQ was essentially flat, gaining just 0.2%. Meantime, in addition to our Fed's monetary meeting, the European Central Bank and the Bank of England conclude their meetings tomorrow. Similar easing efforts are likely to be opted for at that time by those institutions. There is ample reason for the Fed to hold the line on additional monetary efforts, especially given the latest spate of somewhat better business news on our shores, in the form of gains in personal income and consumer confidence. Still, expectations are high that the central bank will choose to add stimulus. The stock market, which ran up strongly last Thursday and Friday, in part on such high expectations, might well sell off sharply if the Fed does not act. We will know the decision and get the bank's accompanying monetary statement shortly after 2PM (EDT) this afternoon.

As for other news, in addition to the aforementioned reports on income and confidence issued over the past two days, and a further chorus of earnings reports, we will be getting data later this morning on manufacturing activity across the nation for July. Yesterday, the Chicago area purchasing managers released its survey on manufacturing and the results were a tad better than expected. Then, on Friday, we will get the government's reports on employment and unemployment, as well as data on non-manufacturing activity. Finally, just within the past half hour, or so, ADP (ADP) has issued its monthly survey on private-sector payrolls. Expectations had been that this survey would show the addition of 108,000 jobs in July. Instead, the release indicated that job growth was 163,000 last month. That positive result, which may or may not translate into a better showing than expected in Friday's government data, is still helping to give our equity futures a lift. Thus, as we get within a half hour, or so, of the start of the new trading day over here, the S&P 500 futures are up by four points and the NASDAQ futures, boosted by a higher early indication from Apple, are ahead by 15 points. – Harvey S. Katz

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