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After the Close - The stock market headed lower in the morning and the losses intensified later in the session.  At the close of the day, the Dow Jones Industrial Average was down 139 points (-0.9%); the broader S&P 500 Index lost 15 points (-0.9%); and the technology-heavy NASDAQ surrendered  30 points (-0.9%). Meanwhile, there was considerable weakness in the smaller names, as the Russell 2000 lost roughly 23 points (-2.5%). This suggests that traders were feeling risk averse, and shunned the less popular names. Market breadth showed a negative bias, as declining stocks swamped advancers by more than 2 to 1 on the NYSE, and by a wider margin on the NASDAQ.

Weakness was apparent in all of the major market sectors, with disproportionately larger losses in the basic materials stocks. The transportation and energy issues also suffered sharp declines. In contrast, the consumer non-cyclical names and the services stocks were off, but held up a bit better than other areas of the market.

Technically, the S&P 500 Index suffered a sharp setback today, largely erasing the prior two day’s gains. Today’s pullback comes just as the index was making its way just shy of new high territory at the 1,597 mark. The index failed to move through this area in mid-April, and is hitting resistance again. It remains to be seen, if today’s weakness will give way to further consolidation, or if the market will rebound and move higher from here. The fact that we are now in the month of May could raise concerns for traders who associate this month with market corrections. The VIX was up about 7% to about 14.5, showing some apprehension building. However, it should be noted that we have seen much more dramatic spikes in this index during market selloffs, and today’s reading suggests little panic among traders.

Today’s economic news did little to help matters. The ADP Employment Change survey showed 119,000 private-sector jobs were added to the economy in April, which was below analyst estimates. This may have some traders concerned about the upcoming April Employment report, due out on Friday.  Further, the ISM Manufacturing Index provided a lackluster reading for April. Construction spending dipped 1.7% in March. Also, the Fed left its interest-rate policy unchanged as expected, but some may be wondering if the current program of asset purchases is proving effective.

Meanwhile, the earnings reports continued to come in. In the Dow, we heard from Merck (MRK Free Merck Stock Report). That issue slipped after the drug giant put out weaker-than-anticipated top-line results.  In addition, Comcast (CMCSA) saw its stock move up after the media company posted better results. - 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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12:30 PM EDT - On a day in which most of the international investment community’s attention is focused on the U.S. equity market—many of the major stock markets in Europe and Asia are or were closed in observance of Labor Day—trading on these shores is weaker thus far. This is not surprising as today’s earnings news, for the most part, was not good and the economic data were uninspiring (more on both topics below). Thus, as we pass the midday hour on the East Coast, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index are all lower. The selloff in the small- and mid-cap markets is even more pronounced, suggesting that investors are exercising some caution, with less of an appetite for risk seen. Overall, declining issues are far outpacing advancers on both the Big Board and the NASDAQ.

As noted, on the earnings front, the news was not particularly uplifting. Much like yesterday’s report from drugmaker Pfizer (PFE - Free Pfizer Stock Report), fellow Dow-30 component and industry peer Merck’s (MRK - Free Merck Stock Reportlatest quarterly release was greeted negatively by investors. While the pharmaceuticals behemoth was able to beat earnings expectations in the latest quarter, investors were bothered by the company’s cloudier near-term outlook. Merck shares are trading lower today. Likewise, investors did like what they saw from credit card giant Mastercard (MA), particularly the reported below-consensus revenue figure. Conversely, investors bought shares of Comcast (CMCSA) after the telecommunications giant reported higher quarterly earnings, driven by strength on the cable side of the business. Investors should also note that social-media giant Facebook (FB) is scheduled to release its latest quarterly results shortly after today’s closing bell.

Meantime, the economic news did not excite investors. Before the market opened, payroll processing giant Automatic Data Processing (ADP) reported that U.S. companies only added 119,000 jobs in April, the fewest in seven months. Then, a half hour into the trading session, the Institute for Supply Management reported that manufacturing activity in the month of April slowed to a barely expansionary reading of 50.7—just above the line that separates an expanding from a contracting industrial sector. Not surprisingly, given these two reports on the economy, the sectors most closely tied to the nation’s output are sputtering today. The biggest laggards are the basic materials and energy stocks, with notable weakness in the shares of material companies Cliff Natural Resources (CLF), U.S. Steel (X), Alcoa (AA - Free Alcoa Stock Report), as well as oil giants Chevron (CVX - Free Chevron Stock Report), and Exxon Mobil (XOM - Free Exxon Stock Report).

There are signs today that investors are invoking a “flight-to-safety” strategy. The yield on the benchmark 10-year Treasury note, which moves in the opposite direction to the price, is currently down four basis points. In addition, the more-defensive sectors (i.e., consumer staples and telecommunications) are performing relative better than the other major groups, which are all in the red as we pass the noon hour on the East Coast.

Looking ahead, investors will turn their attention this afternoon to Federal Reserve, which will release a statement at 2:00 P.M. EDT following the conclusion of its two-day FOMC monetary policy meeting. Our sense is that there will be no game-changing decision in the report, with the lead bank most likely continuing its accommodative monetary policies. 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.

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Stocks to Watch from The Survey Today is another busy day on the earnings calendar, with many companies reporting March-period results, including Dow-30 component Merck (MRKFree Merck Stock Report). Investors were not pleased with the drugmaker’s first-quarter results or its outlook, and the stock is down notably in the premarket. Other equities indicating lower openings this morning on earnings news are credit card company Mastercard (MA), global positioning systems manufacturer Garmin (GRMN), and entertainment company Time Warner (TWX).

On the bright side, shares of  media companies DreamWorks Animation (DWA), Viacom (VIAB), and Comcast Corp. (CMCSA), retailer Big Five Sporting Goods (BGFV), drugstore operator CVS Caremark (CVS), and natural gas producer Chesapeake Energy (CHK) are all moving higher ahead of the bell thanks to favorable quarterly reports. – 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 - After a scintillating opening quarter of 2013, and a reasonably good April, which was underpinned by a solid close, the merry month of May has now arrived. This has been, in many cases, a less-than-thrilling month, with the old adage of sell in May and go away, bearing witness to this often bearish month.

However, there is also the equally well-worn saying of don't fight the Fed, and at this time, with the central bank about to conclude its two day FOMC meeting, the odds are that it will extend its long-running bond-buying program in an effort to further support a now-flagging economic advance.

The rationale for the lead bank continuing its aggressively accommodative ways is not only the subpar rate of business improvement suggested by the recent data, but also the waning inflationary pressures within the economy.

Meanwhile, the month of April ended on an up note yesterday, with the key averages all making late charges to end an uneventful session with modest gains. Specifically, the Dow Jones Industrial Average, which had been a notable laggard throughout the session, closed with a 21-point gain, bringing that index further above the 14,800 level, while the NASDAQ, boosted by a strong gain in the recently firming shares of Apple Inc. (AAPL), added 22 points, or 0.7%. The other averages also did well, with gaining stocks holding a nice lead over declining issues on both the Big Board and the NASDAQ.

The market was not only helped yesterday by the bullish expectations from the Fed meeting, but also by data showing a strong gain in consumer confidence in April, with the Conference Board signaling that its Consumer Confidence Index had jumped to a reading of 68.1 last month, which was well above both expectations and the dour result inked for March. Also, a report was issued yesterday noting that housing prices had risen strongly in the latest survey.

Now, this morning, we have already seen data showing that private-sector payroll growth had come in at 119,000 in April. That metric, issued by Automatic Data Processing (ADP), was a bit below the downwardly revised gain of 131,000 for March. It also was the slowest monthly advance since last September. That, of course, does not augur well for the government's employment release set for this Friday morning. Forecasts there are that the nation added 150,000 jobs in April, which would be a notable advance from the 88,000 positions created in March.

Also, later this morning, we will get manufacturing results from the Institute for Supply Management for April. This key report is now forecast to show a slightly slower rate of growth last month than in March. That metric will be even more closely watched than usual given the disappointing result indicated for this sector yesterday, when Chicago-area purchasing managers posted a contraction in activity. Then, later this afternoon, we will get the Fed's FOMC meeting results and accompanying statement from the lead bank. That can be a market moving event.

As to the equity market, current expectations are that stocks will open on a somewhat mixed note, with the S&P 500 Index futures pointing slightly lower, while the NASDAQ futures are suggesting a nominal opening gain. – Harvey S. Katz

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