After The Close - A listless start to the trading week yesterday gave way to a rash of buying on Wall Street for much of the session today—though some selective profit taking in the final hour did erase a portion of the earlier gains by the final bell. The primary catalyst was some market supportive news both on these shores and overseas (more below) after little information of note hit the newswires yesterday. At the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index had added 79, 35, and 9 points, respectively. Overall, advancing issues led decliners by a healthy margin on both the Big Board and the NASDAQ.

Today’s initial optimism built as several reports began to surface that the budget negotiations between President Obama and Speaker of the House John Boehner have been more constructive in recent days. The two political parties in Washington plan to bunker down in the coming weeks in an effort to keep the “fiscal cliff” of mandatory tax increases and spending cuts from kicking in, a scenario that many have argued would possibly send the U.S. economy back into a recession. Comments this afternoon from Senator Harry Reid, in which he noted that reaching a budget deal before Christmas may be difficult, threw a bit of cold water on trading in the last hour, but it was still a good session to be long equities.

Speaking of the U.S. economy, an hour before trading commenced on these shores, we learned that the international trade gap widened in October. After a quiet day tomorrow, the economic news will heat up at the end of the week, with four reports of note due, including data on retail sales and industrial production. The investment community also will be waiting to hear what the Federal Reserve says after the conclusion of its last monetary policy meeting of 2012 tomorrow afternoon. 

Meantime, the news from the international community, particularly the euro zone, was supportive. Specifically, equities jumped on the release of Germany’s ZEW Economic Sentiment measure. That survey came in at 6.9, which was well ahead of the expected -12.0, and was the first positive reading in six months. Also, a ZEW member noted that European Central Bank and Bundesbank forecasts, which have been revised significantly lower in recent weeks, are too conservative. When trading concluded on the Continent, Germany’s DAX and France’s CAC-40 had booked respective gains of 0.8% and 0.9%. The euro also moved higher versus the dollar.

Turning back to the U.S. market, as noted, the buying was pretty broadbased. Most of the Dow-30 components finished in the black, led by gains in the shares of 3M Company (MMM - Free 3M Stock Report) and International Business Machines (IBM - Free IBM Stock Report). From a sector perspective, technology stood out among the 10 major groups, with shares of Apple (AAPL), which have weakened of late, rising sharply. This, along with good performances from the stocks of fellow tech giants Google (GOOG), Intel (INTC - Free Intel Stock Report), and Microsoft (MSFT - Free Microsoft Stock Report) pushed the sector markedly higher today. All in all, investors showed a greater appetite for risk, with demand for bonds and gold, two safe-haven options, falling today. Defensive-oriented utility stocks were also not in high demand.

There was also some interesting news from the corporate world today. Shares of American International Group (AIG) moved higher after reports surfaced that the U.S. Treasury will sell its remaining shares of AIG common stock. Dollar General (DG) stock fell after the discount retailer said its 2013 revenues are expected at the low end of the company’s previous range. Meantime, investors were buying Texas Instruments (TXN) shares, despite the company’s announcement that it had narrowed its revenue guidance and trimmed its earnings outlook to account for a restructuring. - William G. Ferguson

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

12:20 PM EST - The U.S. stock market opened higher this morning and has been able to hold, and even build on these gains. Technically, today’s move puts the S&P Index firmly above its 50-day moving average, located at 1,417. This will likely be seen as a bullish sign by technicians. Trading volumes have been light over the past few days, and a pickup here would suggest some commitment to the rally. The S&P 500 may encounter a bit of resistance at the current 1,430 level, which acted as prior support in September and October. If we move higher, the Index may also find moving into new high ground at around 1,475 difficult. Notably, the S&P is now only about 3% away from that level.  

At just past noon in New York, the Dow Jones Industrial Average is up 99 points (0.8%); the S&P 500 Index is ahead by 11 points (0.8%); and the NASDAQ, which is again taking the lead, is advancing 36 points (1.2%). Notably, leadership in the NASDAQ, which is largely composed of technology and other fast-growing companies, is important as it shows that traders are more willing to take on risk. Similarly, the Russell 2000, a small cap index, is up nicely, as well. Market breadth is positive, with advancing stocks ahead of decliners by roughly 2 to 1 on the NYSE. Strength can be seen in all of the market sectors, with large advances in the technology, healthcare, and basic materials names. Although still ahead, there is some relative weakness in the utilities and consumer cyclical issues.

The equity markets in Europe are closing out a decent session. A good economic report in Germany probably has helped. Furthermore, the euro is up to almost $1.30 today, which is encouraging. 

Back on our shores, investors may be sensing that progress is being made on the nation’s “fiscal cliff” issue, which could remove a great deal of uncertainty for traders. Meanwhile, the economic reports released this morning were generally positive. The nation’s trade gap came in at $42.2 billion in October, which more or less, met expectations. In addition, wholesale inventories rose 0.6% in October, which was ahead of the consensus view. This may indicate that businesses are feeling better about economic conditions. Meanwhile, the FOMC is starting its two-day meeting. An interest-rate decision is due out tomorrow, and many traders will be looking closely for any shift in overall attitude by the Fed. 

In corporate news, shares of Urban Outfitters (URBN) are trading higher on news that quarterly sales are strong. In the retail sector, Dollar General (DG) put out a decent quarterly report, but the stock is off nonetheless. TNS (TNS) stock is up sharply higher, after that company has agreed to be acquired by a private equity group.  - 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- Tech behemoth and Dow-30 member Hewlett-Packard (HPQ Free Hewlett-Packard Stock Report) is in the headlines this morning, as speculation mounts that activist investor and turnaround specialist Carl Icahn may take a position in the company in order to hasten the pace of CEO Meg Whitman's turnaround attempt. Some investors clearly believe the company may be worth more split up than it is in its current form.

Delta Air Lines (DAL) announced it plans to buy Singapore Airlines' 49% stake in Virgin Atlantic for $360 million, creating a new joint venture on the lucrative North Atlantic routes. The carriers said in a statement they were seeking anti-trust immunity from the U.S. Department of Transportation and expected the transaction to be implemented by the end of 2013, following a review by the European Union, U.S. Department of Justice and other authorities.

On the earnings front, Dollar General (DG) reported results this morning.  The company announced that profits for the third quarter increased to $207.7 million, or $0.62 cents a share, versus $171.2 million, or $0.50 cents, a year earlier. Earnings were $0.63 cents a share, excluding certain items, beating the consensus estimate of $0.60 cents. Sales increased by 10.3% to $3.96 billion, in line with expectations. Same-store sales rose 4 percent. The shares are higher in early trading.

Shares of insurance concern Genworth Financial (GNW) were climbing in pre-market trading after the company named Thomas J. McInerney as Chief Executive Officer to stop losses from insuring mortgages in the United States. Mr. McInerney, previously CEO of ING Americas, replaces Michael Fraizer, who stepped down on May 1st.  - Erik M. Manning

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


Before The Bell - The stock market meandered about yesterday with just a slight bias to the upside, as economic news was scarce; there were few earnings reports of note; and there was little new of substance out of Washington. Among the few items of some note, meanwhile, fast-food chain and Dow-30 component McDonald's Corp. (MCDFree McDonald’s Stock Report) reported better-than-expected November same-store sales, while there was an announcement out of debt-encumbered Italy that its Prime Minister, Mario Monti intended to resign after the 2013 budget was approved. This latter news item did hurt Europe's varied bourses earlier in the day, before there was some late firming in those indexes. Overall, though, there was little of note to rally or pressure equities on our shores.

Thus, by the close of trading, the averages were largely in the black, albeit grudgingly, with the 30-stock Dow Jones Industrial Average up 15 points, the NASDAQ ahead by nine points, and the Standard and Poor's 500 Index in the plus column by a mere half a point. Gaining stocks, meantime, held narrow leads on declining issues on both the Big Board and the NASDAQ.

Now, a new day is fast approaching on Wall Street, and the signals are solidly positive with less than an hour to go before the start of the trading day. For one thing, there is some optimism out of Washington this morning, as talks between President Obama and House Speaker Boehner appear to be making some progress. That is important given that the deadline for reaching an accord on the budget, in order to avoid the dreaded fiscal cliff of mandatory tax increases and spending reductions, is now a mere three weeks away. That bit of apparent good news aside, there remain sizable differences between the two sides on taxes rates, Medicare, and other entitlements. We would assume that the talks will go down to the wire, and even then there is no assurance that a deal will be finalized before the January 2, 2013 deadline.

Then, there is Europe, where there was some positive news out of Germany on that nation's economy this morning, as investor sentiment improved notably during December. The encouraging data helped to drive stocks on the Continent higher, and are having a curative effect, as noted, on our equity futures, which are pointing nicely higher to the tune of four points in the S&P 500 Index and 11 points in the NASDAQ. 

Finally, there is the economy on our shores. Here, in the past few minutes, we have seen a report showing that the nation's trade deficit rose somewhat in October, coming in at $42.2 billion. That was slightly ahead of the forecast of $42.1 billion. It was also up, however, from the downwardly revised trade gap of $40.3 billion in September. Originally, the September figure had been estimated at $41.6 billion. The principal impetus for the widened trade deficit was a record shortfall with China.

Going forward, the week will also feature the latest FOMC meeting, set to conclude tomorrow afternoon. That will then be followed by data on jobless claims, producer prices, and retail sales on Thursday. The heavy news week will then conclude with reports on consumer prices, industrial production, and factory usage on Friday. This busy week should enlighten us somewhat as to the course of the economy in the final quarter of this year. Our sense is that GDP growth, which sprinted ahead at a 2.7% rate during the third quarter, will ease off markedly to a 1.0%-1.5% pace in the current three months. In the meantime, it is more about Washington than the economy, as far as Wall Street is concerned. – Harvey S. Katz    

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