After The Close - The U.S. equity market shrugged off a mixed start to the session and strengthened some as the day progressed. The move up in the indexes was not all that surprising as advancing issues held a comfortable lead on decliners even during the weaker first few hours of the trading day. By the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index were modestly higher, capping off a tremendous week for equities, helped by an agreement between the two political parties in Washington to avoid a series of possibly economically crippling tax increases.

From a sector perspective, it was another encouraging day for the bulls, with most of the major groups finishing comfortably in positive territory. Of note was a nice gain by the transportation stocks. The bellwether Dow Transports continued their recent ascent, which began on Monday. Within the complex, the railroads were the top performers, with shares of Kansas City Southern (KSU) reaching an all-time high in the latest session. Conversely, it was a struggle for technology, which was the main reason why the NASDAQ did not fare as well as the other major indexes. Technology stocks were hurt by a subpar performance from industry giants Apple (AAPL) and Microsoft (MSFT - Free Microsoft Stock Report). Too, the stocks of many of the companies that supply Apple finished lower.

Meantime, most of the investment community’s attention was given to the U.S. economy on the final day of the holiday-shortened trading week. Before the market opened on these shores, the Labor Department reported slightly better-than-expected job creation data for the month of December. Then, a half-hour into the session, we learned that non-manufacturing (services) activity, which accounts for roughly two-thirds of the nation’s output, rose nicely last month. Both of these reports were favorably viewed by investors, who believe that the U.S. economy is growing at a steady, albeit slow, pace. Not surprisingly, most of the sectors closed tied to the performance of the economy fared well today. The better-than-expected U.S. jobs report also gave a boost to trading on the Continent, which like the U.S. market, was mixed at the start. The major European bourses also finished the week on a positive note.

Speaking of the economy, next week will be light on reports, with the only major data coming next Friday on the trade gap. It will also be quiet on the earnings front, as we are still a few weeks away from the commencement of fourth-quarter earnings season. On the earnings beat, much like it has been with regards to the latest economic news, there could be some pleasant surprises, primarily because the bar has been set low for earnings results in many cases. Such may be needed in the coming weeks to avoid at least a modest selloff in an equity market that is overbought at this moment. In fact, the S&P 500 Volatility Index (or VIX) finished the week short of 14, a level that would clearly suggest that buying on Wall Street is overheated. Investors have been throwing some caution to the wind in recent weeks, opting for equities over typically less risky fixed-income securities. The yield on the benchmark 10-year Treasury note, which typically moves in the opposite direction to the price, finished the week at 1.92%, its highest mark since early May of last year. - William G. Ferguson


12:15 PM EST - The U.S. stock market got off to a mixed start this morning, but is now firming up. As we pass the noon hour in New York, the Dow Jones Industrial Average is up 18 points (0.1%); the S&P 500 Index is ahead four points (0.3%); and the tech-heavy NASDAQ, which had been lagging, is ahead slightly, too. Market breadth suggests some underlying support for equities, as advancing stocks are ahead of decliners by roughly 2 to 1 on both the NYSE and the NASDAQ. Almost all of the market sectors are making positive strides, with advances in the transportation, healthcare, and energy stocks. Notably, some of these groups have not shown leadership lately, and bargain hunters may be taking an interest in these issues. In contrast, there is weakness in the technology group today.

Technically, the S&P 500 Index has been making measured up moves, following the dramatic two-day jump that occurred two sessions ago. It should be noted that overall the market seems to be holding its gains, and a bout of profit taking has not yet commenced, which likely suggests traders remain committed to the rally, for now. The VIX is retreating again today, and is now reading just under 14, which is quite low, and may suggest “overbought” conditions are at hand.

Traders received some mixed economic news today. The nation’s employment situation is recovering slowly. According to the Department of Labor, non-farm payrolls increased by 155,000 in December, which was slightly below the consensus view of 160,000. The December figure was also a bit lower than the upwardly revised 161,000 reading logged in November. Meanwhile, the unemployment rate held steady at 7.8% in December. It is possible that this part of the report caused some concern for traders at the outset of the day. There were also a few other releases that played a role in today’s trading. The ISM Services Index came in at 56.1 in December, which was above expectations, and better than November’s reading. However, factory orders for November remained unchanged, where a slight increase had been expected.

In corporate news, shares of Rovi (ROVI) are trading higher, after the digital entertainment company announced that it would be selling part of its business and issued adjusted guidance. Restaurant operator, Sonic (SONC) stock is headed lower after that company posted mixed quarterly results. - 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 There is some earnings news out today. Shares of Mosaic Company (MOS) are up slightly in the premarket, after the producer of crop nutrient and animal feed products reported November-quarter financials. On the other hand, shares of The Finish Line (FINL) are down sharply ahead of the bell, after the retailer of athletic shoes and apparel reported disappointing November-period results.

Elsewhere, the stock of Google (GOOG) is trading just marginally higher, even though the Federal Trade Commission has ended a 19-month investigation into the Internet search giant’s business practices without bring any charges against the company. – 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 calmed down yesterday following two stirring days for the bulls that had seen the Dow Jones Industrial Average soar by a combined 474 points. The impetus for that one-two bullish punch was, in succession, expectations that the House and Senate would reach a deal to avert the dreaded fiscal cliff of mandatory tax increases and spending cuts, and relief that the two sides in Congress had, in fact, secured such a compromise measure.

Now, in truth, that deal was hardly the all-encompassing "Grand Bargain'' that some had been hoping for. Yet, there was enough in the measure to at least kick the can down the road, so to speak, for two months. At that time, the spending components of any finished deal will need to be dealt with, along with the need to extend the debt ceiling. Taken as a whole, and given the hard feelings still in place among many in the two parties, that follow-up attempt at compromise legislation could prove even more daunting. However, for now, at least, the imminent crisis has been avoided, and Wall Street initially celebrated.

Yesterday, though, traders basically managed to retain the gains of the prior two sessions, but certainly not add to them, on average. Specifically, the leading equity averages gave some ground grudgingly, to the tune of 21 points in the Dow and 12 points in the tech-heavy NASDAQ, after having been in positive territory for a time during the afternoon. However, winning stocks bested losing issues on the Big Board to the tune of a 17-to-13 ratio, underscoring the aggregate mixed tone to the trading session. That uneven result was affirmed by the overall action in the mutual funds in the latest session.

Meanwhile, it was also back to the economy yesterday, and in the latest session, Automatic Data Processing (ADP) issued its latest survey on private-sector job creation in December. And the result far exceeded expectations, as the survey showed that the nation had added 215,000 positions last month--nearly 50% above expectations. That report was closely watched for signs that this morning's scheduled issuance by the Labor Department on non-farm payrolls for the nation would track the ADP survey. Expectations for the government report were at 160,000. But here, the result did not exceed expectations. Specifically, Labor indicated that the nation had added 155,000 jobs in total last month, thereby missing the target just nominally. Also, the unemployment rate, which is secured by another survey, came in at 7.8%. That was unchanged from the upwardly revised November rate, which had initially been estimated at 7.7%. Note also that private-sector payrolls gained by 168,000 last month.

Overall, the jobs report was decent, but clearly not a game changer, as the nation continues to press forward on the economic front, notwithstanding the fiscal cliff drama that had played out for much of the past month.

As for Wall Street, traders seemed relieved by the report, and what had looked to be a mixed opening for the stock market before the survey's issuance, now seems as though it will be a higher one when traders get down to business in less than an hour from now. It would seem that some had thought the report could have been weaker than it was. Finally, later on this morning, we will get a key release on non-manufacturing activity, where a small increase is expected. – Harvey S. Katz

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