After The Close - The major U.S. equity indexes were well into positive territory for much of today’s session, even getting a further boost initially from news that the Federal Reserve would not only keep its accommodative monetary policies in place, but intensify its efforts to support economic growth on the homeland. However, in the last hour, or so, of trading, the realization that the reason for the central bank’s ultra-aggressive stance is that the nation’s economy is still nowhere close to firing on all cylinders set in and selling picked up considerably.  By the closing bell, the Dow Jones Industrial Average and the NASDAQ were slightly lower, while the broader S&P 500 Index was nominally higher. All in all, there were clear signs that investors had become a bit more worried about the Federal Reserve’s outlook as trading drew to a conclusion.    

As noted, trading received a bit of a boost from the central bank when it said that it would keep the current accommodative monetary policies in place until a sizable dent is made in the nation’s stubbornly high 7.7% unemployment rate. The central bank committed to monthly purchases of $45 billion in Treasuries on top of the $40 billion per month in mortgage-backed bond buying program it commenced in September. It also said it will keep the federal funds target rate near zero until the U.S. unemployment rate falls to 6.5%. Such monetary actions are often viewed positively by market participants. However, the Federal Reserve’s actions and comments clearly point out that a lot of work still needs to be done to get this nation’s economy running on higher octane. In fact, the lead bank tweaked its 2013 economic growth forecast for the U.S. It now predicts GDP will grow 2.3% to 3.0% next year, down from its September forecast of at least 2.5% growth.

The Federal Reserve’s statement dominated the day’s economic headlines. However, that will change quickly, with four important reports, including data on retail sales and industrial production, due over the next two days. We will also get reports on producer and consumer prices before the trading week wraps up. The latter two releases will also give some evidence of whether Federal Reserve Chairman Ben Bernanke’s current benign stance on inflation is still warranted.

Absent the Federal Reserve’s remarks, there was not much event-driven news to push the market in either direction. Things remain status quo with regards to the ongoing negotiations to avoid the “fiscal cliff” of mandated tax increases and spending cuts. Both political parties in Washington appear to be holding to their beliefs, and thus an eleventh-hour showdown on Capitol Hill may be forthcoming. We would also not be surprised if “a can was kicked down the road” scenario emerges, which would push the negotiations on to the new Congress that will take over in late January.

From a sector perspective, some leadership came from the basic materials and financial groups—but even they weakened in the latter stages of trading. Within the basic materials sector, stocks of the precious metals and diversified chemicals companies performed the best. Meantime, the property and casualty insurers and the diversified financial services stocks pushed the financials higher. It was also a decent day for the coal stocks in an otherwise forgettable year for the group. Not surprisingly, given the reversal in trading over the last hour, more than half of the 10 major sectors finished the day in the red. - William G. Ferguson

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

12:30 PM EST - The U.S. stock market moved higher early this morning, but has since pulled back. At just past noon in New York, the Dow Jones Industrial Average is up nine points (0.1%); the S&P 500 Index is higher by three points (0.2%); and the technology heavy NASDAQ, which is relatively weak today, is off two points. Market breadth still shows a slightly positive bias to the session, with advancing issues outnumbering decliners by a narrow margin on the NYSE. Many of the market sectors are advancing, which is a good sign. There is leadership in the financials, as these companies, which struggled during the banking crisis, have been quite slow to recover. The conglomerates are also showing some strength. Conversely, there is weakness in the consumer non-cyclical and the services stocks.

Technically, the S&P 500 Index is attempting to extend its recent gains. Volumes picked up yesterday, indicating that traders may be entering the market with a bit more force, possibly in anticipation of a holiday rally.

Investors may be looking to the Fed for direction, as an interest-rate decision is slated to be released this afternoon. Participants also get to digest remarks made by Fed Chairman Ben S. Bernanke. Some traders may be expecting the Fed to announce further measures, such as asset purchases, used to keep the economic expansion intact. Elsewhere, investors also are watching the ongoing debate surrounding the nation’s budget. However, nothing concrete has been announced there, as of yet. Tomorrow, we get a look at the retail sales figures for November. The Producer Price Index, as well as a report on business inventories, is also due out.

In corporate news, Costco (COST) stock is slightly higher, after the discount retailer posted strong profits. Investors may have been looking for a healthier top line, and that may explain a lackluster performance today. Joy Global (JOY) shares are higher, after the large mining equipment company put out a positive quarterly report. In the financial area, shares of Aetna (AET) are up, after the insurance company issued guidance.

Widely traded stocks moving higher today include: Netflix (NFLX), Ion Geophysical (IO), and ADR Panasonic (PC). Issues headed lower include: Charles River Labs (CRL), generic drug giant Teva Pharmaceuticals (TEVA), and Stifel Financial (SF).   - 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 Investors’ attention will likely be on today’s Federal Reserve meeting, but there is some corporate news to be aware of. On the earnings front, warehouse club retailer Costco Wholesale (COST) has reported November-period results that seemed to please Wall Street, and that stock is up slightly ahead of the bell. October-quarter results from mining machinery and equipment manufacturer Joy Global (JOY) did not receive a warm reception, however, and JOY shares are trading marginally lower in the premarket. Elsewhere, health insurer Aetna (AET) and diversified manufacturer 3M (MMMFree 3M Stock Report) offered updated guidance. Both stocks are indicating slightly higher openings this morning. – 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 stock market pressed ahead strongly yesterday, on optimism that the nation's political leaders will fashion a compromise on the budget, and thereby sidestep the so-called fiscal cliff, and on some hopes that the Federal Reserve will renew its commitment to a policy of further monetary stimulus.

All told, the Dow Jones Industrial Average, which was up more than 130 points at its best levels of the day, ended the session ahead by 79 points. The NASDAQ, also ahead strongly throughout the session, ended trading with a gain of 35 points, buoyed by a stellar showing in the shares of recently weak Apple (AAPL).

As for the stock market, in general, equities benefited, as noted, from some early optimism that talks between President Obama and House Speaker John Boehner have progressed to a point where a deal would seem possible, if not probable. However, when Senate Majority Leader Harry Reid intoned that it would be extremely difficult to get a deal done before Christmas, equities pulled back some, but clearly did not give up their entire gains.

All of this took place on a day in which the Commerce Department reported that the nation's trade gap increased modestly in October, although it remained well below the record levels set earlier in the year.

As for the Federal Reserve, the nation's central bank will conclude its latest two-day FOMC meeting this afternoon. The get together is likely to break no new ground on monetary policy, but we do expect the Fed to replace the now expiring Operation Twist with some additional bond buying as a way of injecting further stimulus into an economy that may grow by just over 1% in the current quarter.

Meanwhile, the economic beat really picks up tomorrow and Friday, when we will get government reports on weekly jobless claims, producer prices, retail sales, consumer price inflation, industrial production, and factory utilization. Expectations are that jobless claims held relatively steady in the latest week, that producer prices fell in November, as oil quotations eased, that retail sales rose by 0.5% in November, but were unchanged if auto sales are backed out, that consumer prices likewise dipped, and that industrial production eased nominally, while capacity utilization was likely unchanged for the latest month.

As for the markets, they are up a bit this morning in Europe, while the equity futures are nicely higher on our shores, suggesting some extension of yesterday's rally when trading commences in a few minutes from now. – Harvey S. Katz

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