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After The Close - The U.S. equity indexes started the session in the red, as mixed economic news from overseas, along with a disappointing report on personal income and spending here, put a damper on early trading. However, buying picked up after a couple of favorable economic reports were released following the start of trading and the market was able to hold narrow gains into the closing bell. The Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index were modestly higher—the mid-cap S&P 400 Index, though, finished lower. Overall, the spread between advancers and decliners on the both the Big Board and the NASDAQ was narrowly in favor of the former, which was a reversal from earlier in the day. Issues hitting new highs were well ahead of those falling to new lows. All in all, it was a winning week on Wall Street for those long equities.

From a sector perspective, most of the 10 major groups were nominally higher, but there was some notable weakness in the industrials, basic materials, and energy issues. The latter two groups were hurt by declines in both gold and oil prices. Within the basic materials space, the mining and metals, steel, and precious metals stocks were the biggest laggards. Meantime, the price of crude was lower after manufacturing activity in China, which is a big consumer of oil, was weaker-than-expected in February. The news from Germany, the euro zone’s largest economy, was a bit more uplifting, as retail sales came in ahead of expectations, and the country's manufacturing PMI came in at 50.3, slightly ahead of expectations. The flash headline from the Continent, though, was the euro zone’s worse-than-expected unemployment rate, which came in at 11.2%. Germany’s DAX and France’s CAC-40 finished the day in the red. The euro was also weaker versus the dollar, which also hurt commodities—a stronger greenback makes commodities more expensively priced in overseas markets.

As noted, it was also a busy day for the U.S. economy. Before trading commenced on these shores, investors received a weaker-than-expected report on personal income—though spending came in as forecast. However, that disquieting report was offset by favorable data on the all-important manufacturing sector—the February ISM Index came in at 54.2, above the consensus expectation of 52.4—and The University of Michigan's final February Consumer Sentiment Survey rose to 77.6 from the 76.3 that was posted in the preliminary Survey.

Meantime, the ongoing failure of the two political parties in Washington to come to an agreement to avoid $85 billion in automatic spending cuts from kicking in seemed to already be baked into the market’s valuation. The bickering between President Obama and Republican leaders on Capitol Hill did not seem to faze investors in the least today. Still, absent an 11th-hour deal, the cuts will take place between tomorrow and October 1st—and some economic pundits believe the spending reductions will hurt the country’s economic growth—although just how much is open to question given the ill-defined nature of the situation.

Looking ahead to next week, the economy will remain the focus of the investment community, with reports due on nonmanufacturing activity, the trade gap, and employment. We will also get the Federal Reserve’s latest summation of economic conditions when Beige Book data are released on Wednesday afternoon. Meanwhile, earnings news will be light, with all of the Dow-30 companies having now reported their latest quarterly results.   - William G. Ferguson

At the time this article was written, the author did not have positions in any of the companies mentioned.

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12:30 PM EST - Stocks are trading mixed after coming off their worst levels of the session. Just past the noon hour on the East Coast, the Dow Jones Industrial Average is up 15 points and the NASDAQ is slightly higher. The broader market is showing weakness, though, with more stocks declining than advancing on the New York Stock Exchange.

The day started out on a decidedly poor note, with sentiment hurt by gloomy economic news out of Europe and government budget cuts in the United States set to start being phased in. Rising unemployment and a poor showing from business indicators in the euro zone put pressure on the equity markets across the Atlantic. Consequently, both the euro and the British pound fell below key support levels.

Stateside, an estimated $85 billion in reduced spending by Uncle Sam takes effect today for the remaining seven months of the U.S. government’s fiscal year ending September 30th. The move is part of a broader set of projected $1.2 trillion in spending cuts due to take place over ten years.

Although efforts to mitigate the harshness of the spending cuts have thus far failed, there is a feeling that at least some of the once-routine expenditures could still be restored in the interest of public safety. Furloughs or layoffs of government employees would hurt the economy, too.

Meantime, a flurry of business data today provided a mixed picture of the economy. Personal income fell more than expected in January, but spending held up, for the most part. Elsewhere, positives included a rise in the University of Michigan consumer sentiment index and a better-than-expected reading on the ISM manufacturing index. Auto sales also seem to be holding their own, although February is normally a slow month for the industry. On the down side, construction spending fell in January, when a rise had been forecast.

At the sector level, there is weakness in energy and basic materials stocks on lower prices for oil and gold. Shares of driller EOG Resources (EOG), oilfield services provider Halliburton (HAL), and miner Barrick Gold (ABX) are trading lower as a result. On the upside, there is relative strength in healthcare issues, such as Johnson & Johnson (JNJ Free J&J Stock Report) and Gilead Sciences (GILD).

Stocks have regrouped somewhat after falling hard and fast at the opening bell, but the bears still have the upper hand, judging by the weak advance-decline line that could change if signs of progress on a budget deal in Washington arise, although the two sides don’t seem close an agreement yet.  - Robert Mitkowski

At the time this article was written, the author did not have positions in any of the companies mentioned. 

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Stocks to Watch from The Survey The earnings parade has slowed, but there are still some notable reports out that investors will want to be aware of. Best Buy (BBY) stock is trading nicely higher in the premarket, after the electronics retailer reported solid January-period results. Also, the company did not receive a buyout offer from its founder, Richard Schulze, by yesterday’s deadline, and it now appears the retailer will focus on improving its operations. Likewise, shares of footwear company (and UGG parent) Deckers Outdoor (DECK), apparel and accessories retailer Gap Inc. (GPS), and salesforce.com (CRM), a provider of customer relationship management services, are all up ahead of the bell on earnings news.

Elsewhere, shares of supermarket operator Harris Teeter (HTSI) are indicating a higher opening this morning, after reports surfaced that industry peer Publix may be considering a bid for the company. Finally, after sliding sharply late yesterday afternoon, shares of Intuitive Surgical (ISRG) are poised to rebound today, as investors gained new information regarding an FDA probe into the medical devices manufacturer. All of these presumptive increases run counter to the expected weaker opening this morning on Wall Street. – Matthew E. Spencer

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

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Before The Bell - The stock market came close to the proverbial promised land of a record closing high on the Dow Jones Industrial Average yesterday, but in the end, it could not complete the journey. But it came close, moving at one point to within 15 points of the all-time Dow record of 14,164. Then, some end-of-the-month selling took hold in the final few minutes.

Specifically, after that 30-stock index had soared to 14,149 around midday, it progressively pared those gains, which at one point had been close to 75 points, over the course of the afternoon. However, just a few minutes before the final bell sounded, the Dow was still ahead by some 30 points. But even that modest gain faded quickly, and the blue-chip composite finally ended the day down 21 points, to a still not-too-shabby 14,054. The other indexes eased slightly as well, with just the small-cap Russell 2000 managing to hold narrowly in the black for the session. Winners and losers, meantime, were about even on both the Big Board and the NASDAQ.

What prompted the late selling was most likely month-end index rebalancing, along with a dash of concern as the feared budget sequester was set to kick in as the two political parties in Washington were continuing to play a game of chicken as the deadline neared.

The late selling notwithstanding, the market ended February with small gains, making it two up months in a row to start the new year. Historically, such a showing has proven most bullish for stocks, with an up year almost always following such a burst of early euphoria. Still, after the two sides in Washington failed to structure a late compromise that would stop the $85 billion in annual cuts from hitting the federal budget, half of which are set to come from the Defense Department, there is understandably some angst as we wade in to these uncharted waters this morning. The consequent sharp drop in the equity futures thus far today would serve to underscore such worries. To wit, with less than an hour to go before the start of the new trading day and month, the Standard and Poor's 500 Index futures are off seven points and the NASDAQ futures are down 11 points.

Meantime, yesterday was a fairly busy day for economic news, with the government reporting a welcome decline in both weekly and continuing jobless claims. On the other hand, the Commerce Department weighed in with a less welcome report, when it issued revised fourth-quarter GDP figures. Initially, the quarter had seen a rare contraction in business activity, with that gauge falling by a nominal 0.1%. Expectations had been that GDP would be revised to show a gain of 0.5%. When the figures were issued, the increase was recorded as just 0.1%.

Now, today, a number of key reports are scheduled for release, with the major issuance being the monthly survey on manufacturing activity. Also due out are the latest figures on consumer sentiment, auto sales, and construction spending. These will all be out over the course of the day. In data issued so far, the government has reported that personal income tumbled by 3.6% in January, as many companies pushed up their early 2013 dividend payments into 2012 and Americans were hit with the increase in payroll tax withholdings on the first of the year. At the same time, personal consumption expenditures increased by a scant 0.1%.

All told, following the fireworks so far in 2013, the new month is likely to start out on a cautious note, with the bull perhaps taking a breather before the next attempt to set a Dow record high.   - Harvey S. Katz

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