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After The Close - Wall Street battled back to post a mixed showing today, after spending much of the session in the red owing to concerns about prospects for worsening conditions in the euro zone.

Traders started the morning coming to grips with fairly sizable losses on the European exchanges, where fallout over the Cyprus bailout and the inability to form a government in Italy weighed on sentiment.

One of the concerns with the Cyprus bailout is that it will undermine confidence in European banks, despite assertions by officials that imposing losses on depositors will not become commonplace elsewhere. Meanwhile, in Italy, a bond auction was not particularly well received after no progress was made toward forming a coalition government. 

Yields on Italy’s five-year notes rose to 3.65%, their highest in several months, as a result. That is compared to a yield on similar-duration U.S. debt of just 0.73%. Broadly indicative of the negative tone across the Atlantic, too, was the euro’s decline to under $1.28, the first time it has traded that low since November.  

Despite the poor backdrop at the opening bell, when the Dow Jones Industrial Average fell more than 100 points, stocks were able to retake much of the ground given up. At the close, the Dow had trimmed its losses to about 34 points and the NASDAQ was even ahead by four points. The broader market was biased to the upside, as well, with the number of advancing issues narrowly outpacing decliners on the Big Board.

Among Dow stocks, UnitedHealth Group (UNH) was the biggest gainer, partly on the thinking that the new health care system will mean bigger premiums. On the down side, JPMorgan Chase (JPM - Free JPMorgan Chase Stock Report) was the biggest percentage decliner in a weak financial sector.

Tomorrow brings the final day of trading in this holiday-shortened week. In fact, the bond market will close early on Thursday, at 2 p.m. EDT, ahead of the Good Friday holiday.

The economic data due out tomorrow includes a closely watched final revision to fourth-quarter Gross Domestic Product, where a rise to .6% from an earlier estimate of .1% is projected. Any material diversion from expectations could affect investor sentiment, since the GDP figure is seen as illustrating accelerating or slowing momentum.

Also on tap for Thursday is the Chicago Purchasing Managers Index, where a mostly steady reading is anticipated in March from the prior month. Separately, weekly initial unemployment claims are thought to remain under 350,000, hinting at moderate job growth.   - Robert Mitkowski
        
At the time of this writing, the author did not have any positions in the companies mentioned.  

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12:30 PM EST - The stock market opened lower this morning, but has managed to pare its losses. As we pass the noon hour in New York, the Dow Jones Industrial Average is off 35 points (-0.2%); the S&P 500 Index is down three points (-0.2%); and the tech-heavy NASDAQ is shedding four points (-0.2%). Market breadth is negative, with declining stocks outnumbering advancers by roughly 2 to 1 on the NYSE. Most of the market sectors are losing ground today, with losses in the conglomerates, capital goods, and consumer non-cyclical names. The energy issues are also lower, as crude oil is off a bit to $95.90 a barrel. However, the high-yielding utility shares and the defensive healthcare names are bucking the downtrend today.

Technically, the S&P 500 has been locked in a trading range for the past couple of weeks. The high end of that range is located at about 1,565, while the low end corresponds to about 1,540. Some consolidation here is likely warranted, given the large advance stocks have posted in the past several months. Also, traders are likely concerned about the upcoming corporate earnings season, and specifically about the guidance that will be offered by corporations. Elsewhere, the problems in Cyprus have also caused concerns about the situation across Europe. The euro is losing ground against the U.S. dollar and is at $1.28. Investors are again showing an interest in gold today.

There were few economic reports released this morning. The housing market was back in the spotlight, as pending homes sales slipped 0.4% in February. Analysts had been looking for sales to rise about 2.0% for the month. Notably, the decline in February also stands in contrast to the increase logged in January. It should be noted that some of the decline may be due to constrained supply, rather than a lack of demand, and that makes the latest report a bit less negative. Tomorrow, we get a look at the nation’s employment situation, as the weekly initial and continuing jobless claims are due out. We also get the final reading on GDP for the fourth quarter of 2012, as well as a report on the economy in the greater Chicago area.

Meanwhile, there was some corporate news out today. Cliff’s Natural Resources (CLF) is seeing its stock fall sharply after some “Wall Street” downgrades. SAIC (SAI) stock is rising, after the company posted better-than-expected quarterly profits. -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 Earnings news is quite light today, though there are some M&A stories in the headlines. To wit, shares of UTStarcom Holdings (UTSI) are soaring in the premarket, after one of the telecommunications equipment company’s largest stockholders, Shah Capital, offered to buy the shares it does not already own for $3.20 each. Elsewhere, the stock of Goldman Sachs (GS) is indicating a slightly lower opening this morning, after the investment bank struck a deal with Warren Buffett’s holding company, Berkshire Hathaway (BRKB). Back in 2008, Mr. Buffett threw Goldman a $5 billion life line in exchange for preferred stock and warrants to purchase 43.5 million GS shares at $115 apiece. Now Mr. Buffett has given up his company’s right to exercise those warrants in exchange for less shares that require no cash outlay on Berkshire’s part. – 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 U.S. equity market rebounded from Monday’s slow start to the trading week, helped by a series of mostly encouraging data on the U.S. economy. The economic news drew the attention of investors away from the sovereign-debt problems in the euro zone, particularly those of Cyprus, which have had an adverse effect on equities over the last week. When all was said and done, the Dow Jones Industrial Average, on the strength of a triple-digit advance, finished at a record high and the broader S&P 500 Index was just 1.38 points shy of its all-time high established in 2007. The other major U.S. indexes (i.e., the NASDAQ, the S&P Mid-Cap 400, and the small-cap Russell 2000) also produced solid performances. However, turning in a similar showing today may prove to be a rather daunting task (more below).

The rash of buying on Wall Street yesterday pushed the S&P 500 Volatility Index (or VIX) sharply lower, a clear sign that the U.S. equity market is overextended. However, our sense is that investors, emboldened by some more semi-encouraging data on the economy and not overly enthused by the lack of other investment options (interest rates are historically low), are still holding stocks in high demand. However, this might be tested today. Yesterday, energy, consumer staples, and healthcare stocks were of most interest to investors.

As noted, yesterday was a busy day for the U.S. economy. Before the market opened, we learned that durable goods orders were up nicely in February and home selling prices, according to the S&P/Case Schiller 20-market survey, continued to firm, as demand for homes picks up and supply remains constrained. Then after trading commenced, we received a mixed report on homebuilding, as new home sales were down sequentially, but still up year over year. Perhaps those reports were positive enough for investors to look past disconcerting data showing that consumer confidence tumbled in March.

Meantime, with the earnings and economic news light here today, investors will once again turn their attention to Europe, and so far today the tidings from across the Atlantic have not been good. Specifically, international equity markets, including France’s CAC-40 and Germany’s DAX, are under pressure as concerns grow about financially struggling Cyprus, and the effect austerity measures put in place there will have on the rest of the euro zone. Cyprus, under the cloud of protests against a rescue plan that many Cypriots feel will push their country into an economic slump and cost many their jobs, is finalizing capital control measures today to avoid a run on the banks by depositors anxious about their savings after the struggling nation agreed to painful rescue package with international lenders. Worries about the financial turmoil for the euro zone’s second-smallest economy have pushed the euro to its lowest level in more than four months versus the U.S. dollar.

With less than an hour to go before the start of trading on these shores, the U.S. equity futures and the trading from overseas presage a lower opening for our market. The bulls, which, for the most part, have been on a remarkable run for much of this year, will have their work cut out for them today. The disquieting reports from the Continent and the lack of any major news on the economy or from Corporate America will likely have investors focusing on the euro zone, which right now looks to be music to the ears of the bears. Stay tuned. – William G. Ferguson

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