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After The Close - The record-setting week on Wall Street—which saw the Dow Jones Industrial Average set an all-time high on four consecutive trading days, and the S&P 500 Index book its biggest five-day advance since the first week this year—fittingly concluded on a strong note, with the aforementioned Dow closing just shy of 14,400. The Dow and S&P, along with the NASDAQ, all finished higher in the latest session. It is also worth noting that interest in the small- and mid-capitalization stocks was even stronger, as investors continue to show no signs of shying away from risk, even with the market likely overextended. The S&P 500 Volatility Index (or VIX) finished the week at a level that would continue to suggest such behavior is in vogue.

Once again pushing the equity market higher was encouraging news on the U.S. economy. On the heels of some decent data on both the manufacturing and non-manufacturing sectors, we received news earlier today that employment picked up considerably in February. Specifically, the Labor Department reported that U.S. employers added 236,000 jobs and the unemployment rate fell from 7.9% in January to 7.7% last month. The job creation figure far exceeded the consensus expectation of 155,000 new positions. Meantime, getting lost in all the attention being given to the employment report was data showing that U.S. wholesale inventories increased 1.2%, to $504.4 billion, last month. It marked the fastest pace of growth since December 2011. The encouraging data on the U.S. economy are triggering buying on Wall Street. Year to date, the Dow, the NASDAQ, and the S&P 500 Index are up 9.9%, 7.5%, and 8.8%, respectively.

Turning our attention back to today’s showing, it should come as no surprise that those sectors most closely tied to the performance of the U.S. economy fared the best. There was leadership from the industrials, energy, consumer discretionary, telecommunication stocks. Conversely, the more-defensive groups, including healthcare and utilities, were not in as much demand.

As noted, investors continue to show an increased appetite for risk these days. Such sentiment pushed the small-cap Russell 2000 and the S&P Mid-Cap 400 Indexes higher. Also, an indication that caution is being thrown to the wind is the lack of demand for fixed-income securities. In fact, the yield on the 10-year Treasury note, which moves opposite to the price, spiked seven basis points today, finishing the week at 2.06%. The Fed’s aggressive bond-buying program in recent years has kept interest rates near historic lows, reducing borrowing costs. Such an environment is pushing investors away from conservative investments, like bonds, and into equities. 

Speaking of the Federal Reserve, the good report on the job market has investors contemplating what the lead bank’s next move will be. Despite comments to the contrary earlier this week by Chairman Ben Bernanke, there is growing sentiment that the Fed’s aggressive bond-buying program--$85 million in Treasury bonds and mortgage-backed securities purchases each month—may need to be revisited in the coming months, especially if the employment picture continues to brighten. With that in mind, investors should note that a quicker than expected end to the ongoing stimulus measures would likely be viewed negatively by market participants. Just over two weeks ago, the investment community sentiment soured, following the issuance of the minutes of the latest Federal Open Market Committee meeting that hinted that some board members would welcome the discontinuance of the aggressive bond-buying programs now in place. Our sense is that the central bank will take a wait-and-see approach, as the economy, despite the recent encouraging data, is still far from firing on all cylinders.

Looking ahead to next week, the U.S. economy will remain center stage in investors’ eyes, with reports due on retail sales, producer and consumer prices, and industrial production. Meantime, the earnings calendar will be sparse, with the only notable reports coming from the retailing sector. In that space, we will get quarterly results from Dick’s Sporting Goods (DKS), Costco Wholesale (COST), Express (EXPR), Guess? (GES), Aeropostale (ARO), Hot Topic (HOTT), and Urban Outfitters (URBN). -William G. Ferguson

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

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12:30 EST - The stock market opened higher, pulled back sharply about an hour into the session, but is now advancing again. At just past noon in New York, the Dow Jones Industrial Average is up 32 points (0.2%); the S&P 500 Index is ahead by three points (0.2%); and the NASDAQ is adding on six points (0.2%). Market breadth indicates a slightly favorable bias to the session, with advancing issues ahead of decliners by almost 2 to 1 on the NYSE. Most of the market sectors are making strides, with leadership in the capital goods, transportation, and conglomerate stocks. However, there is some weakness in the technology and utility issues. Notably the Philadelphia Semiconductor Index (SOX) is off a bit today, and that is likely weighing on the technology sector.

 

Technically, the market is moving higher, despite a long standing rally that has had few interruptions. Notably, the S&P 500 Index has advanced roughly 20% from its June 2012 low of about 1,275. While many point out that a correction is inevitable, it is hard to time the market. It is important to note that the current rally is being fueled by some bullish developments. For instance, corporate profits have been decent; the interest-rate environment will likely remain favorable; there are signs that the nation’s employment situation is improving (see below); and the housing market and related finance sector are looking much better. Meanwhile, the problems in Europe remain a concern. But, many traders have by now gotten used to those issues, and they no longer come as much of a surprise.

The economic releases put out this morning were constructive. Non-farm payrolls for the month of February increased by 236,000, which was ahead of expectations, and better than last month’s figure.  Further, the nation’s unemployment rate dipped to 7.7%, down from the 7.9% posted last month, and also better than anticipated. Wages and hours worked came in as expected, too.  No doubt, traders were happy about this report. But it is important to note that the news was largely anticipated, once the Automatic Data Processing (ADP) report was released on Wednesday, and the market’s move earlier in the week likely reflected this.  Elsewhere, wholesale inventories for the month of January rose 1.2%, and this may also suggest a favorable outlook.

There are a few corporate developments worth noting. Specifically, Pandora Media (P) is seeing its stock rise, after the Internet music provider put out strong fourth-quarter results, highlighted by a dramatic top-line advance. Things also are looking up for H.R. Block (HRB). That stock is rising, after the tax preparer issued a optimistic outlook.  - Adam Rosner

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

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Stocks to Watch from The Survey There is some earnings news out today, and Internet radio operator Pandora Media (P) looks to be one of the big winners. That stock is soaring in the premarket, after January-period revenues came in better than expected. The company also announced that CEO Joe Kennedy plans to step down. Shares of tax preparer H&R Block (HRB) and women’s clothing and accessories retailer ANN Inc. (ANN) are also indicating nicely higher openings this morning on earnings news, though on a smaller scale than Pandora stock.

On the other hand, shares of athletic footwear and apparel retailer Foot Locker (FL) are trading moderately lower ahead of the bell on earnings news. The stock of headphone designer and manufacturer Skullcandy (SKUL) is faring even worse in pre-market trading, after that company reported fourth-quarter results and issued disappointing guidance.

Elsewhere, shares of Gardner Denver (GDI) are indicating a slightly higher opening this morning, after the manufacturer of compressors, blowers, pumps, etc. agreed to be acquired by private-equity firm KKR for $76 a share. – 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 - Another day, another record for the Dow Jones Industrial Average, as that composite of 30 mostly blue chip stocks rose to a third-straight all-time closing high yesterday, gaining 33 points, in an uneven session, that saw modest gains in the aggregate, but some continuing weakness in selective issues.

All told, and in addition to the Dow, the Standard and Poor's 500 Index added three points and the NASDAQ gained almost 10 points, after having been modestly in the red for much of the session. The late-comeback was driven largely by a positive reversal in the shares of recently depressed Apple Inc. (AAPL). In addition to these larger-cap composites, the small-cap Russell 2000 added nearly five points, making that index a materially bigger winner than its aforementioned large-cap peers on a percentage basis. This latter move suggests that we may be seeing a further broadening in the long advance, as we proceed along the merry trail of notably higher equity prices. With this latest gain, the Dow is within a whisker of 14,330. That represents more than a doubling from the bear market's early 2009 trough of below 6,500.

Helping stocks continue their climb yesterday were additional supportive metrics on the employment front, with the latest week seeing a further decline in jobless claims. That upbeat data followed, by one day, an encouraging report on private-sector payroll growth in February from Automatic Data Processing (ADP). Such metrics were, of course, just a prelude to this morning's survey on non-farm payrolls and the unemployment rate for February, which was issued just moments ago by the U.S. Labor Department (see below).

In addition to the late burst by Apple, the market also was helped by gains in the financial stocks, with Bank of America (BACFree BofA Stock Report) and JPMorgan Chase (JPMFree JPMorgan Stock Report) both rising nicely on the day. There even was a modest comeback by the still-depressed basic materials stocks. Fears of increasing competition from overseas, in particular China, and concerns about the economic situation in Europe, where recessions have spread across the Continent, have been pressuring such equities. The metals stocks in general have been among the stock market's weakest performers in recent weeks.

Overall, however, the picture remains bright as we approach the second third of March, especially stateside, where recent days have seen, in addition to the aforementioned improvements in the employment situation, progressively better news on the consumer confidence, manufacturing, and nonmanufacturing sides. All of this would appear to imply that the nation's gross domestic product, which was essentially flat in last year's final period, gaining a token 0.1%, will rise by upwards of 2% in the fast-concluding three months.

As to the aforementioned employment situation, the Labor Department has just reported that non-farm payrolls rose by 236,000 last month, a much better figure than the one, which had been expected. (In all, the pundits had forecast a payroll gain of 155,000 last month.) This latest metric would finally appear to be the kind of number that will spark a major downturn in the jobless rate. To wit, February saw just a nice downtick, from 7.9% to 7.7%, in the unemployment rate. This is the lowest rate of unemployment since December of 2008, when we were in the midst of the most severe recession since the 1930s. This latest dose of good news has helped the futures build on their early gains, suggesting that we will start the coming session notably to the upside when trading gets under way in less than an hour 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.