After the Close - The two-day hiatus for the bulls was shortlived, as buyers returned to the market today after back-to-back weaker sessions to start the trading week. Investors were somewhat emboldened by a decent start to the fourth-quarter earnings season when after yesterday’s closing bell, Dow-30 component Alcoa (AA - Free Alcoa Stock Report) reported in-line results, with a slightly better-than-expected performance on the revenues side and an improved outlook for the year ahead—that latter two factors seemed to be what investors focused on.

Our sense is that the just-begun earnings reporting season will serve as a diversion for investors over the next few weeks ahead of what is expected to be contentious negotiations on spending cuts and the debt-ceiling limit in Washington. In fact, the consensus among pundits is that there is not likely to be an overwhelming amount of surprises on the earnings front over the next fortnight, though lowered expectations for the fourth quarter leave room for companies to surprise investors even if their results are not particularly strong. That could provide a boost to selective stocks. Such was the case today with regards to Seagate Technology (STX). The price of the technology stock moved higher after the company said second-quarter revenues should exceed consensus expectations.

The recent sideways pattern to trading since the two large advances last week would suggest some hesitation right now on the part of investors to make any additional major moves either into or out of the equity market. Hence, equities have traded in a narrow band around the neutral line for the better part of the last week. By the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index had added 62, 14, and four points, respectively. It was also worth noting that the small-cap Russell 2000 and the S&P Mid-Cap 400 Index were comfortably higher in the latest session, a sign that investors, despite the aforementioned declines to start the week, are still not against adding some more risk to their portfolios. All told, advancing issues outpaced decliners on both the Big Board and the NASDAQ.

From a sector perspective, there was not much to dislike, as most of the major groups finished the session in positive territory. Leadership came from the industrials and healthcare areas. Conversely, energy was under mild pressure for most of the day, with the stocks of oil and gas exploration and production companies, as well as those of the coal producers in the red. Data showing a rise in crude oil and refined products inventories applied pressure to the energy group.  According to the U.S. Energy Information Administration, crude oil inventories rose 1.3 million barrels last week.

Meantime, other than the anticipated earnings report from Alcoa, it was a rather quiet day on the earnings front. That was matched by little U.S. economic news of note. However, all that changes next week when news on both fronts ramps up significantly. We will get the latest quarterly results from a handful of Dow-30 companies next week, including earnings from financial giants JPMorgan Chase (JPM Free JPMorgan Stock Report), Bank of America (BAC Free BofA Stock Report), and American Express (AXP - Free AmEx Stock Report).   - William G. Ferguson

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


12:00 PM EST - The U.S. stock market got off to a decent start this morning and is managing to hold most of its gains. As we pass the noon hour in New York, the Dow Jones Industrial Average is up 81 points (0.6%); the S&P 500 Index is higher by six points (0.4%); and the NASDAQ  is adding on 16 points (0.5 %). Market breadth shows widespread support for equities, as advancing stocks are ahead of decliners by roughly 2 to 1 on the NYSE. Essentially all of market sectors are heading higher. There is leadership in the consumer cyclical issues, with gains in the auto and truck manufacturers. The capital goods and transportation stocks are also strong. However, the energy issues are lagging a bit today, due to weakness in the coal miners. The high-yielding utility issues are relatively sluggish, too.

Technically, the S&P 500 Index is showing some strength today, as it continues to consolidate in a sideways range. While we have had a few down days lately, volumes have not been excessive suggesting selling has been well controlled. Certainly, there has been little rush to take profits, and there has been some late-day bargain hunting going on, suggesting traders are still looking to enter the market. The sentiment remains bullish, and probably overly so, at this point. The VIX, which is lower again today, is now under 14, after hitting a 52-week low.

The economic news was minimal today, but picks up tomorrow with the release of the weekly initial and continuing jobless claims figures. We also will get a look at wholesale inventory levels.

Traders were likely feeling better about the corporate outlook today, as the fourth-quarter earnings season is off to a decent start. Specifically, yesterday after the close, Alcoa (AA - Free Alcoa Stock Report) put out a report that more or less matched expectations. Notably, the outlook was likely a bit more optimistic than some had expected. The stock is up slightly today. Another important report that many will be watching will be the Wells Fargo (WFC) release due out on Friday. Notably, many analysts are looking for a recovery in the financials. Progress here would suggest that the credit markets are finally on the mend. Elsewhere, Constellation Brands (STZ) stock is slipping a bit, even though the company posted decent results. Also, telecom stock Clearwire (CLWR) shares are up on acquisition news.   - Adam Rosner

At the time of this article's writing, the author had a position in Alcoa (AA).


Stocks to Watch from The Survey Aluminum giant and Dow-30 component Alcoa (AAFree Alcoa Stock Report) kicked off fourth-quarter earnings season after it reported December-period results late yesterday. Investors appeared pleased with the company’s financials, and the stock is trading modestly higher in the premarket as a result. Investors also cheered an earnings report from wine and spirits producer and marketer Constellation Brands (STZ), and that stock is indicating a moderately higher opening this morning. On the other hand, shares of Apollo Group (APOL) are down sharply in pre-market trading, after the parent of The University of Phoenix released November-quarter financials and issued disappointing guidance.

There is also some news on the M&A front. Shares of Clearwire Corp. (CLWR) are trading notably higher ahead of the bell, after the telecom services provider received a rival takeover bid of $3.30 a share from satellite television operator Dish Network (DISH). This latest news comes after fellow telecom Sprint Nextel (S) had struck an agreement in December to purchase the roughly 50% stake in Clearwire that it does not already own for $2.97 a share. Finally, Skullcandy (SKUL) stock is up in pre-market trading on speculation that the headphone manufacturer may be a takeover candidate. – 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 - It was an encore performance on Wall Street yesterday, as the Dow Jones Industrial Average again lost a little more than 50 points on the day, just as it had on Monday, while the Standard and Poor's 500 Index and the NASDAQ crept a bit lower as well. There weren't any big stories to upset or embolden investors, so traders did the normal and logical thing following a spirited runup over the past fortnight, and they took some more profits.

Specifically, it was a light economic news day, as it will be again today and also tomorrow, save for the latter session's normal weekly issuances on first-time and continuing jobless claims. There also was not much news out of Washington, where the two parties are likely gearing up for what promises to be a tough fight over mandated spending cuts and an extension of the nation's borrowing limits. Both of those issues must be settled before the end of next month or risk a possible default by the nation. For now, however, traders do not seem as overly concerned about such possible developments, as one would sense that they probably should be.

In the meantime, whatever focus there is right now seems to be on earnings, and the start of fourth-quarter reporting season. That quarterly event kicked off after the stock market closed yesterday afternoon when aluminum giant and Dow Jones Industrial Average component Alcoa (AAFree Alcoa Stock Report) reported in-line earnings for the prior year's closing period and somewhat better-than-forecast revenues. That news is helping the stock a bit this morning, with the equity, which closed the latest session at $9.10 a share, indicated now to open the new day at $9.25. Over the next two to three weeks many hundreds of companies, both large and small, will issue their statements. Expectations are low, so beating consensus may not be all that difficult. Our thinking is that revenues, which may not be as formidable as earnings, and guidance, which, likewise, may not be compelling, will be the critical barometers.

In other news, Boeing (BAFree Boeing Stock Report) again fell back in trading and was the biggest laggard in the Dow, as the aerospace and defense giant saw its stock fall $2 on the day. Malfunctions with a 787 Dreamliner aircraft heading from Boston to Tokyo, which had to return to the terminal due to a fuel leak, clearly unnerved some investors. On a brighter note, agricultural products provider, Monsanto (MON) climbed by more than $2.50 a share, closing in on the $100 mark, on better earnings.

Now, a new day dawns, and a slightly higher market in Europe, relief over the generally in-line results at Alcoa, and some selective bargain hunting over here are combining to lift our equity futures ever so modestly with less than an hour to go before the start of the new trading day. – Harvey S. Katz

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