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After the Close - Stocks were weighed down by disappointing global economic data today, but the major averages managed to shrug off most of the gloom. At the close, the Dow Jones Industrial Average was up 19 points, although the NASDAQ was down by seven points. But the broader market showed weakness, with declining stocks outpacing winners by about three to two on the New York Stock Exchange. Even so, with the market having rallied nicely this month, there were many more stocks hitting fresh 52-week highs than lows. Going into today, the Dow was up 487 points in September, or 3.7%.

The day started with less-than-encouraging news out of China, where word came that manufacturing activity fell for the eleventh straight month in September. The silver lining is the data indicated that the manufacturing sector is not easing that much, there are signs of stabilization, and stimulus measures are expected to boost growth in the fourth quarter. But it is clear that China’s growth story is not what it once was, as the euro-zone-based global slowdown in trade lingers.

The latest business information out of Europe and the United States wasn’t too exciting, either. The data showed that manufacturing in Europe was on the decline, as well, owing to the ongoing recession there. Stateside, reports on weekly jobless claims, a survey of manufacturing in the Philadelphia region, and the nation’s leading economic indicators were not terrible, but didn’t paint a rosy picture, either.

Among the stock market’s sectors, the defensive healthcare, consumer staples, and utilities groups fared the best. Shares of drugmakers Merck (MRK Free Merck Stock Report) and Pfizer (PFE - Free Pfizer Stock Report), both components of the Dow Jones Industrial Average, had a good day. The stock of food processor ConAgra (CAG) also rose as the company reported higher profits. Utilities outperformed, as well, with shares of Duke Energy (DUK) and FirstEnergy (FE) in the plus column.

On the down side, the weak manufacturing data was bad news for stocks of shipping companies, such as railroaders Norfolk Southern (NSC) and CSX Corp. (CSX), as it looks as if there will be less demand to move raw materials and finished products. In fact, the Dow Jones Transportation Index saw the day’s steepest decline among the major market averages.

Tomorrow, there are no earnings reports or economic data of note on tap. That could mean more uninspired stock price action is in store to close out the week on Friday, in the absence of any market-moving news out of Europe and Asia.  - Robert Mitkowski 

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

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12:15 PM EDT - The U.S. stock market headed lower this morning, but is looking to pare its losses as we pass the noon hour along the East Coast. All told, the Dow Jones Industrial Average is off just two points; the broader S&P 500 Index is down two points (-0.2%); and the NASDAQ is weaker by nine points (-0.3%). Market breadth still suggests a soft tone, as declining stocks are outnumbering advancers on the NYSE. Moreover, most of the market sectors are slipping, led lower by the transportation stocks and the basic materials names. However, there is strength in the consumer non-cyclical group and in the healthcare stocks, as these issues are in positive territory.

Technically, the S&P 500 Index may be taking a breather, which is understandable given its recent strength. Notably, the VIX is at 14, which is not too far from its 52-week low of about 13 and levels reached prior to the market’s correction in May. By this measure, sentiment is quite bullish, and may even be at extreme levels, suggesting that the market has gotten “overbought”.  Moreover, we have seen little in the way of full-scale profit taking lately, so some selling would not be too surprising.

Today’s economic reports offered little to support the recent market rally. Specifically, the employment situation was back in the spotlight. Initial jobless claims for the week ended September 15th, came in at 382,000, which was higher than the figure many analysts had anticipated. However, continuing jobless claims showed some improvement. We also received a weak reading for the broader economy. The Conference Board’s Leading Indicators report for the month of August slipped 0.1%, which stands in contrast to the 0.5% improvement logged in July. 

Moreover, we are already starting to see some third-quarter earnings revisions. Railroad giant Norfolk Southern (NSC) tempered its outlook, sending that issue down sharply. In retail, Bed Bath & Beyond (BBBY) is also seeing its shares slip on a mixed quarterly report. However, ConAgra (CAG) stock is higher, after the food company posted good results.

Meanwhile, the weakness in the U.S. likely started overseas.  Asia’s markets traded sharply lower, on weak economic news released in China. In Europe, the bourses also put in a poor session, as an uninspiring economic report was issued in France.   - 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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Stocks to Watch from The Survey There is some earnings news to pay attention to today. After the market closed yesterday, Adobe Systems (ADBE), a developer of various computer software products that enable users to create, transfer, and print electronic documents, announced August-period results and issued a lackluster outlook. The stock is trading just slightly lower in the premarket on the news. Investors were more disappointed with earnings reports from home-goods retailer Bed Bath & Beyond (BBBY), railroad Norfolk Southern (NSC), which did not release earnings, but did update its guidance, automotive retailer CarMax (KMX), furniture maker Herman Miller (MLHR), information services company IHS Inc. (IHS), and investment bank Jefferies (JEF). All of those stocks are indicating lower openings this morning, with IHS, MLHR, BBBY, and NSC the biggest decliners). On the bright side, Wall Street seemed to be pleased with quarterly results from drug store Rite Aid (RAD), leading packaged foods distributor ConAgra (CAG), and aerospace company AAR Corp. (AIR), as those stocks are trading nicely higher in the premarket. The big winner looks to be Apogee Enterprises (APOG), as the building materials company reported August-quarter results and offered a better-than-expected outlook. The stock is soaring in pre-market trading on the news. – 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 - Stocks rose early yesterday in what initially seemed to be a reaffirmation of the equity market's recent strong upward trend following several days in which Wall Street had marched in place on unusually low volume. In fact, armed with news that the Bank of Japan had eased monetary policy and that two U.S. housing reports had been most supportive, stocks rallied further in mid-morning, and it appeared as though the bulls might put in a really good day, with the Dow Jones Industrial Average jumping to a mid-session gain of better than 60 points. The market then largely held its increases until very late in the session when the profit takers came in, and pared the session's advance notably into the close.

By session's end, the Dow had given back almost all of its earlier gains, retaining just 13 points of its advance, while the NASDAQ and the Standard and Poor's 500 Index had shed all but several points of their respective gains. The gap between winners and losers also narrowed, with just a four-to-three plurality of gaining stocks over losing issues on the Big Board. The NASDAQ, in fact, had a nominally unfavorable ratio for the bulls.

As to the housing news, it remains uniformly positive. To begin with, Tuesday had seen data on builders' confidence to rise a six-year high. Then, yesterday morning, the Commerce Department reported a further gain in housing starts on both a consecutive-month and year-to-year basis. Building permits also advanced on a year-to-year basis in August, although permits eased nominally from the prior month, which had seen a strong gain. Then, some 30 minutes into the trading session, the National Association of Realtors, a key housing trade group, reported a sizable jump in sales of existing homes in August and a further rise in home prices. Next week, we are due to get the month's report on new home sales. That, too, should be comparatively positive.

All of this good news, though, could not light much of a fire under the bulls, as many continue to fret that the stock market has come too far, too fast, and that we are ripe for some profit taking, even if it is mild. And, we may well be getting some of that so far this morning in the overseas markets, as both the bourses in Asia and Europe are under pressure in the current session. The impetus for this latest selling, which is moderate in scope, is a round of unfavorable economic metrics. Specifically, data from Japan, China, and Europe show that the world's economy is struggling, though a positive bond auction in Spain has helped to limit the damage so far today.

Hurting stocks, in particular, was a survey in Europe pointing to a deepening recession on the Continent. Moreover, statistics out of Japan detail a drop in exports. Finally, reports out of China show a diminution in manufacturing output in September, albeit that pullback is at a slower pace than in August. Over here, meanwhile, the day ahead will see data on the Leading Indicators. Tomorrow, though, will be a light news day. Finally, as to the economy, we have just had the issuance of the weekly report on both initial jobless claims and continuing claims, with both categories showing small declines. However, both series remain elevated.

As to individual names in the news, we will be getting earnings data from software giant Oracle (ORCL) after the market's close today, while fellow tech-behemoth Adobe Systems (ADBE) has posted in-line earnings, but a shortfall in revenues. That stock, though, is little changed in the pre-market. Elsewhere, home products retailer Bed, Bath & Beyond (BBBY) missed its earnings target and that stock is selling off in the pre-market, while struggling banking giant Bank of America (BACFree BofA Stock Report) has set a target of cutting 16,000 jobs by the end of this year. That stock is also showing a likely lower opening. Overall, the equity futures, not surprisingly given the setbacks abroad, are pointing to a weaker start, with the S&P 500 Index futures now off by more than six points and the NASDAQ futures lower by just over nine points. – Harvey S. Katz

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