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After The Close - The stock market put in a somewhat choppy session today, before closing on a decidedly bullish note. To wit, after a weak opening, the averages managed to stage a healthy advance in the early afternoon, then surrendered most of these gains, and finally staged a late-day comeback. At the close, the Dow Jones Industrial Average was up 60 points (0.4%); the broader S&P 500 Index was ahead eight points (0.5%); and the tech-heavy NASDAQ added on nine points (0.3%). Market breadth highlighted the somewhat mixed tone to the session, as advancing stocks were just modestly ahead of decliners on the NYSE and the NASDAQ. Nonetheless, there were roughly 820 stocks at new highs with only 90 at new lows on the NYSE, which shows the dramatic upwards thrust of the market over the past few months. The various market sectors put in a divided performance, as well. There were advances in the consumer issues. Also, the utilities rebounded nicely. This was offset by weakness in the basic materials and energy sectors.

Technically, the S&P 500 Index crossed through the 1,650 mark today. Notably, the index has made steady progress for some time now with few setbacks. In fact, the absence of any meaningful correction in the market for some time may be cause for some caution. No doubt, traders are sitting on profits, and if the outlook were to become less favorable, it should be assumed that some selling would result. For now, the bull market rally seems to be intact. The VIX was essentially unchanged at just under 13, which is a very low reading.

There were quite a few economic reports issued this morning, and for the most part, they were uneventful. The Producer Price Index declined by 0.7% in April, after plunging in March, as well. Ultimately, this suggests that there is little inflationary pressure acting on the economy, for now. Industrial production was a bit sluggish for the month of April. In the regional economy, traders received a weak Empire Manufacturing Survey, suggesting that business in the New York area has been a bit uneven. 

There were a few corporate news items released today. In retail, Macy’s (M) saw its stock rise after the department store giant delivered healthy quarterly results. In the industrials, shares of Deere (DE) moved lower as investors turned more cautious about that company’s 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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12:20 PM EDT - The trading day began with some mild profit taking, likely prompted by mixed economic news on these shores and some disappointing GDP data from the euro zone (more on both below). However, as the morning progressed, the bulls returned to the market and the major U.S. equity indexes are now back in positive territory. As we reach the midday hour on the East Coast, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index are all trading modestly higher. Meantime, advancing issues now hold a slight lead on decliners on both the New York Stock Exchange and the NASDAQ, a sharp reversal from earlier readings.

From a sector perspective, the two biggest laggards are the basic materials and the energy groups. This should not come as a surprise after the Commerce Department released a weak report on industrial production and capacity utilization for the month of April. Within the basic materials sector, the chemicals stocks are the biggest decliners. In energy, shares of the oil and gas producers are having a tough time today. However, within the last hour of trading, the more-defensive sectors (i.e., consumer staples, utilities, and healthcare), which have been doing well from the get-go, now have some company in positive territory among the top-10 sectors. Technology stocks, which account for the largest market weighting, though, are relatively unchanged today. 

On the economic front, although the headline report on industrial production report was disappointing and likely prompted some initial selling on Wall Street, investors had to take some comfort in another tame reading on producer (wholesale) prices (down 0.7% in April) and a better-than-expected report on the U.S. housing market. With regards to the latter, we learned this morning that confidence among U.S. homebuilders rebounded this month, reflecting improved sales during the spring selling season and the strongest outlook for sales over the next six months in more than a half decade. The National Association of Home Builders/Wells Fargo Builder Sentiment Index jumped to 44 this month, its first increase since December.  Although this housing report is not giving the stocks of the major new homebuilders a boost—share of Lennar (LEN), Toll Brothers (TOL), PulteGroup (PHM), and D.R. Horton (DHI) are all trading in the red—it is helping to lift the overall sentiment of the investment community, as housing is an important cog in the nation’s economic output.

Meantime, as noted above, the economic news from the other side of the Atlantic was not very encouraging, as several prominent euro-zone nations reported a contraction in first-quarter GDP this morning. Specifically, France’s GDP decreased 0.2%; Italy’s economic output declined 0.5%; and GDP for the entire 17-nation confederation fell 0.2%. Even the region’s kingpin, Germany, saw only a nominal pickup (+0.1%) in first-quarter GDP. Still, it appears that the expectations that the region’s economic reports were going to be weak once again were already baked into market valuations, as the major European bourses are actually modestly higher as trading draws to a conclusion on the Continent.

Turning back to the homeland, today’s earnings news was mostly positive and market supportive. Department store retailer Macy’s (M) posted better-than-expected April-period results, while also enticing investors with a dividend hike and an increase to its share-repurchase program. Deere & Co. (DE) also reported solid April-quarter results, but shares of the farm equipment maker are lower on a disappointing outlook.  Investors also should note that Dow-30 component and technology giant Cisco Systems (CSCO - Free Cisco Stock Report) is expected to release its latest quarterly results after the close of trading today. -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 There are a few stocks that will likely see active trading today on earnings news. Indeed, shares of Macy’s (M) are up slightly in the premarket, after the department store retailer released better-than-anticipated April-period results, increased its dividend 25%, and added to its stock-repurchase authorization. Shares of Agilent Technologies (A), a provider of instrumentation solutions for the communications, electronics, healthcare, and life sciences industries, and IT services company Computer Sciences Corp. (CSC) are also up ahead of the bell on earnings news. Conversely, the stock of Deere & Co. (DE) is indicating a notably lower opening this morning, after the manufacturer of farm equipment released solid April-quarter results, but issued a disappointing outlook. – 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 Monday market pause that we had mentioned yesterday turned out to be a one-day affair, as equities quickly started the latest session to the upside yesterday morning and built on that initial momentum as the day proceeded. In fact, by the close of trading the Dow Jones Industrial Average had tallied another triple-digit-point gain and another all-time closing high, gaining 124 points in the process. The other averages also did well, led by the small-cap Russell 2000, which tacked on more than 12 points, or 1.25%. For once, the NASDAQ, normally a leader on the way up, added less than the other key indexes, gaining just 0.69% on the day. Stocks rising in price, meantime, led losing issues by some two-to-one on the Big Board and by a bit more than that on the tech-heavy NASDAQ. There was simply no place for the beaten-down bears to hide.

The latest advance came on a light news day, suggesting that the momentum being shown by the bulls is based on more than one or two economic metrics. In all, this was the 19th all-time high for the 30-stock Dow this year. Many pundits have been forecasting a dip in the market, and we opine that one will come at some point. But the tried cliché of ``Sell in May and go away,'' a long-time mantra on Wall Street, has simply not worked this time around.

And it is not a series of upbeat news items, we submit, that has propelled stocks steadily to one record after another. But, while we have noted what has not done the bears in, just what has led to this strong and durable advance in U.S. equities over the past few months, and to a larger degree than not over the past four years? Our sense is that it is the Federal Reserve and the easy money policy initiatives orchestrated by the nation's central bank.

Specifically, the Fed has been aggressively buying bonds, in an effort to drive down long-term interest rates. This policy has been followed as the Fed no longer has the latitude to push down short rates as they have been near zero for several years. And the lead bank's policies have worked, in our view, helping to prop up the long-suffering housing market and lifting the wealth of so many Americans as stocks have pushed notably higher. There simply is no other place to put one's money, as fixed-income instruments pay out so little, and have not been worth the more limited risk offered by them versus equities.

So, Wall Street is flourishing. Of course, the better housing data, the irregular business expansion, the generally favorable trends in corporate earnings, and the continued absence of a widespread inflation problem are also helping. And, this latter indicator was again affirmed this morning, as the Labor Department has just reported that producer prices fell sharply in April, dropping by 0.7% in all, just as they had done in March, when they fell 0.6%. Meanwhile, just minutes from now, the Commerce Department will report on industrial production and capacity usage for April. Slightly lower readings are the consensus forecast for now.

As to the day ahead, the economic news does not seem to be market moving as yet on these shores, and what little influence we will likely have on the news front is coming from overseas, and specifically from Europe, where reports issued today suggest that France is in recession already and that Germany may be headed in that direction. Over here, recession fears are minimal, but the equity futures are slightly lower nonetheless, presaging a listless opening in about a half 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.