After the Close - The U.S. stock market opened lower this morning, firmed up around midday, but ended up in negative territory. At the close of the session, the Dow Jones Industrial Average was off about 58 points (-0.5%); the broader S&P 500 Index fell six points (-0.4%); and the NASDAQ, which has been quite weak lately, lost 20 points (-0.7%). Market breadth was negative, as declining issues outweighed advancers by about 2 to 1 on the NYSE. There was some relative strength in the consumer and utility names. However, there was weakness in the technology and energy stocks. Technically, the S&P 500 Index has been hovering around its 200-day moving average at 1380, which may serve as an area of support. Sentiment is still somewhat bullish, even though the market has been weak. The VIX is at about 16, which is a very low reading, and suggests a complacent mood on the part of traders. Given the situation, it will be interesting to see if the market delivers a holiday season rally this year.
Overseas, traders were likely waiting for some news concerning Greece’s financial troubles. That country’s parliament recently agreed upon an austere fiscal budget in an effort to secure bailout funding. However, no concrete news was forthcoming from meetings in the region. The major bourses spent most of the session in negative territory, but closed with small gains.
On our shores, the economic news was light again today. However, tomorrow we get a look at October’s retail sales numbers, the Producer Price Index (PPI), and September’s business inventories report. We will also get a look at the minutes from the FOMC’s October meeting. Also, weighing on investors is the nation’s “fiscal cliff” issue, which would result in higher taxes and reduced spending.
Meanwhile, the corporate earnings reports provided some information for traders to mull over. Specifically, Dow-30 component Home Depot (HD – Free Home Depot Stock Report) shares moved higher, after the company reported strong quarterly figures, and issued encouraging guidance. The strength here may be a reflection of a gradually recovering housing market. Widely watched Michael Kors (KORS) stock moved higher today, after the apparel company posted a dramatic increase in the top line and a strong profits, as well. Dick's Sporting Goods (DKS) also saw its stock rise on a better-than-expected report.
Stocks that moved up sharply today included Diamond Foods (DMND), Clean Energy Fuels (CLNE), and American Railcar (ARII). Stocks that headed lower included Weatherford International (WFT) and AECOM Technology (ACM). - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
12:30 PM EST - After a ho-hum performance on Monday, the U.S. equity indexes are putting together a decent showing so far today. The trading day was initially difficult, mostly due to fears about Greece, but investors are doing a bit of bargain hunting following last week’s sharp setback. Market participants seem willing, at least for the moment, to look past the looming “fiscal cliff” issue and the sovereign-debt problems in Europe. Our sense is that some news from the corporate world—though all is not well there either—is having a positive effect on some of the major sectors today (more below). As we pass the midday hour on the East Coast, the Dow Jones Industrial Average and the S&P 500 Index are nicely higher, while the NASDAQ is little changed.
As noted, there was some interesting news from the corporate world today. Shares of Microsoft (MSFT - Free Microsoft Stock Report) are lower after the tech giant announced that Steve Sinofsky, who headed the Windows unit, has left the company and is being replaced by Julie Larson-Green, who will oversee all software and related hardware issues. The Microsoft news, along with reports that Vodafone (VOD) wrote down the value of its networking businesses in Spain and Italy, was initially weighing on the technology sector and the tech-heavy NASDAQ. The basic materials group is lower, as a dour fourth-quarter report from struggling steel producer AK Steel (AK) is pulling down the sector. Shares of peers, U.S. Steel (X) and Cliffs Natural Resources (CLF), are in negative territory. Energy stocks and oil prices are also weaker today as concerns about the global economy persist.
Meantime, there is some leadership coming from the consumer noncyclical and cyclical sectors. The latter performance is not surprising, as the group is getting a boost from a strong quarterly showing from Dow-30 component The Home Depot (HD - Free Home Depot Stock Report). Shares of the home-improvement retailing giant are up on strong third-quarter results, which included notable advances at both the top and bottom lines. In the noncyclical area, the stocks of Diamond Foods (DMND) and Strayer Education (STRA) are the top gainers.
Elsewhere, the major European bourses, after lingering in the red for most of the session, are now looking to finish higher as trading enters the final minutes on the Continent. Initially, investors were not pleased that euro-zone finance ministers came away from their latest meeting with no decision regarding the next wave of aid for ailing Greece. Just yesterday, Greece’s Parliament agreed to spending cuts and austerity measures. But since the initial reaction, buying has picked up as European leaders vowed to meet again next week to discuss plans for Greece. Perhaps a report in the last hour that European countries deliberating on the payment of delayed loans to Greece could decide to bundle several tranches together in a single transfer of roughly 44 billion euros has quelled investors’ fears somewhat. Meanwhile, economic data from the region, particularly from the euro zone’s largest economy were not uplifting, as Germany’s ZEW Economic Sentiment Index came in at negative 15.7, which was well below the expected reading of -9.8. A setback for Germany’s economy would make dealing with the region’s debt problem all the more daunting.
Despite the move higher on Wall Street today, there definitely seems to be less demand for riskier holdings these days. Demand for safe-haven U.S. fixed-income securities is on the rise, as noted by the drop in the yield on the benchmark 10-year Treasury note, which at one point this morning fell below 1.60%, its lowest mark since early September. - William G. Ferguson
Stocks to Watch from The Survey– A number of Dow-30 components are in the headlines today. This morning, the world’s largest home-improvement retailer, The Home Depot (HD – Free Home Depot Stock Report), reported solid October-period results, due in part to the recovery in the housing market. The stock is up moderately in pre-market trading as a result. Also, leading networking equipment maker Cisco Systems (CSCO – Free Cisco Stock Report) is scheduled to release October-quarter financials after the market closes today. Finally, shares of Microsoft (MSFT – Free Microsoft Stock Report) are indicating a notably lower opening this morning, after the software giant said that Steven Sinofsky, president of the Windows division, was leaving his position, effective immediately.
Today is also a big day for retailers with fiscal years ending in January, as many are starting to release October-quarter results. Investors seemed to be fairly pleased with reports from Michael Kors (KORS), Dicks’s Sporting Goods (DKS), and TJX Companies (TJX), as those stocks are all indicating higher openings this morning. Wall Street was less enthused with quarterly financials from luxury retailer Saks Inc. (SKS), and that issue is down slightly ahead of the bell.
Other stocks that could see heavy trading today include oilfield services and equipment provider Weatherford International (WFT), which is down sharply in pre-market trading on earnings news, and AK Steel (AKS). That issue is trading notably lower in the premarket after management unveiled a plan to sell new common stock and raise debt. – 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 - Wall Street will be returning to the trading arena this morning following a non-descript semi-holiday session in which the leading equity averages basically went nowhere. In fact, on a session in which the bond market was closed in observance of Veteran's Day, the Dow Jones Industrial Average, the NASDAQ, and the Standard and Poor's 500 Index all moved less than a point, getting nearly as close to an exact unchanged reading as seemingly possible. The mid- and smaller-cap indexes also went nowhere, on a day in which the ratio of advancing to declining stocks on both the Big Board and the NASDAQ was basically even.
The market, it would seem, is primarily focused, following the conclusion of the recent and contentious election, on the so-called fiscal cliff of mandated tax increases and accompanying spending reductions that are set to kick in on January 2, 2013 unless there is curative action from a bitterly divided Congress. We continue to believe that calmer heads will prevail between the re-elected Obama Administration and the continuing Republican majority in the House. However, time will tell if our cautious optimism is warranted.
In addition to our problems, there are concerns overseas, notably in the euro zone, where Greece's approval of its 2013 budget and the austerity measures contained within that package gave some solace to the markets yesterday, but not enough to put most of the bourses into the black. And this morning, there are fresh concerns brewing on the Continent, as Greece's creditors still have not agreed on giving that financially troubled nation its next installment of needed rescue funds. The delay in getting a workable accord and funding is giving investors in Europe fresh cause for concern and helping this morning, at least, to push the bourses well into the red. For example, earlier this morning, Germany's Dax was off by almost 1%, as was the Paris CAC-40 and the London FTSE 100.
And over here, on another limited day for key economic news, our futures are pointing to a lower start, with the Standard and Poor's 500 Index futures off by eight points and the NASDAQ futures in the red by some 18 points. Once more, investors seem to be zeroing in on the fiscal cliff negotiations. There also is some focus on earnings this week, where iconic do-it-yourself retailer and Dow-30 component Home Depot (HD – Free Home Depot Stock Report) has reported better-than-expected earnings earlier this morning. That stock is bucking the presumptive downward start to the market with a nice indicated gain at the start of the trading day in less than an hour from now. However, the news is not as rosy for another Dow component. Specifically, Microsoft (MSFT – Free Microsoft Stock Report) has reported that the President of its Windows division will be leaving soon. That stock is showing a decline in the pre-market following a moderate setback yesterday.
The absence of hard economic news until later in the week, when we will see reports on producer and consumer prices, retail sales, and industrial production, is keeping investors and traders alike focusing on the fiscal cliff. And things could stay on that vexing subject for some time yet, as we doubt whether this fixable problem will, indeed, be fixed before the clock ticks down on the new year in some seven weeks from now.
Our sense is that the bulls are still in charge here, albeit with some wrinkles along the way. However, we caution that such wrinkles can be painful for investors, recalling the combined 434-point two-day decline in the Dow Jones Industrial Average last Wednesday and Thursday. – Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.