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After The Close - A volatile week for equities on Wall Street ended in fitting fashion, which was with investors on another rollercoaster ride although within fairly contained parameters. To wit, the major U.S. equity indexes started today’s session notably weaker, with continued growing sentiment that the Federal Reserve will begin to wind down its aggressive bond-buying program later this year and some weak earnings data from Corporate America (more below) weighing on equities. However, as the day progressed, the major indexes were able to retrace a sizable portion of the earlier losses and by the close, the key averages were mixed, with the Dow Jones Industrial Average up slightly and the NASDAQ and the S&P 500 Index off nominally. Overall, there was definitely a negative tone to trading, as declining issues finished ahead of advancers on both the Big Board and the NASDAQ, but the margin did narrow considerably on the latter by the final bell.

The latest five-day stretch marked the first notable showing by the bears in quite some time. The Dow 30 finished 0.3% lower for the week, while the tech-heavy NASDAQ and the broader S&P 500 Index were each off 1.1%. As noted, growing concerns that the Federal Reserve will take its foot off the pedal with regards to easy monetary policy later this year was the main culprit behind the recent slight profit taking. Although Federal Reserve Chairman Ben Bernanke still says that more work needs to be done and he was in favor of continuing the bond-buying programs, investors were unnerved to hear that a few Federal Reserve officials would welcome cutting back on the stimulus measures as early as next month. A tightening of monetary policies by the central bank is often not viewed favorably by market participants—and that seemed to be the case once again this week.

From a sector perspective, nearly all of the 10 major groups finished the day in the red. The biggest laggards were the energy, utilities, and basic materials stocks. The latter retreat, which came late in the day, was a bit surprising, given today’s encouraging report on durable goods orders. Our sense is that investors are still worried that the moderating economic growth in China will weigh on the materials companies in the second half of this year. Within the basic materials space, the forest and wood products companies and the precious metals and minerals suppliers were the biggest losses. On the other hand, the consumer staples stocks and, to a much lesser extent, the healthcare issues were in demand in the latest session, most likely owing to their defensive nature. 

The extra attention on the Federal Reserve seemed to overshadow what was a mostly positive week of reports on the U.S. economy. Among the encouraging releases were an uptick in existing and new homes sales last month, a notable drop in initial weekly unemployment claims, and a better-than-expected report on durable goods orders. Still, these reports were not able to offset the growing concerns about the Federal Reserve’s next steps with regards to monetary policy and the lackluster economic data from China, the world’s second-largest economy. Next week, we will receive data on consumer confidence (Tuesday), the first-revision to first-quarter GDP (Wednesday), and personal income and spending (Friday).

Meanwhile, the news from Corporate America did not do much to lift investors’ spirits today. In fact, shares of Abercrombie & Fitch (ANF), The Gap (GPS), Sears (SHLD), and salesforce.com (CRM) all fell after the companies reported disappointing quarterly results. Next week, the earnings news will be very light, save for a few notable reports from the retailing space, including the latest quarterly results from Express (EXPR), Big Lots (BIG), Wet Seal (WTSC), and Costco Wholesale (COST).

Investors should note that trading resume on Tuesday morning, as the U.S. equity and bond markets are closed on Monday in observance of Memorial Day.   - 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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12:20 PM EDT - The stock market moved lower this morning, but has since come off the session lows. At just past noon in New York, the Dow Jones Industrial Average is off 32 points (-0.2%); the broader S&P 500 Index is lower by about six points (-0.4%); and the tech-heavy NASDAQ is down 13 points (-0.4%). Market breadth is weak, as declining issues are outnumbering advancers by decent margin on the NYSE. Weakness can be seen in most the market sectors, with declines in the energy and utility stocks of note. The industrial issues are also lagging. Meanwhile, there is some strength in the consumer non-cyclical names.

Technically, the S&P 500 Index has logged two consecutive down days. Importantly, trading volumes on those occasions rose sharply, suggesting that traders were taking action. While the market did see some bargain hunting, it was not enough to tip the scales, which may indicate that the bulls are fatigued and that value hunters are finding little to buy. Notably, by some measures the market may be overbought. For example, the market now has a price-to-earnings multiple of about 17, which is a bit elevated.  For comparison sake, this figure reached almost 20 at the last major top in 2007, and was as low as about 10 at the bottom in 2009. As such, returns could be lackluster for a while. Further, the dividend yield for equities, as a group, stands at just about 2%, which is historically quite low.

Meanwhile, earlier this morning, investors received some favorable economic news, as durable goods orders rose 3.3% in April, which was far better than expected and a large reversal from the decline posted in March. Notably, a good deal of the gain was due to transportation industry. 

There also were some important corporate reports out today. In retail, Sears Holdings (SHLD) stock is trading sharply lower after the company posted disappointing quarterly results. In technology, Pandora Media (P) stock is rising after the Internet music provider reported a large increase in the top line.   - 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 Retailers are in the spotlight again today, as they continue to release April-period results. Investors were largely unimpressed, however, and shares of Sears Holdings (SHLD), Aeropostale (ARO), Abercrombie & Fitch (ANF), The Gap (GPS), and Foot Locker (FL) are all indicating lower openings this morning (SHLD is showing the most weakness ahead of the bell). Shares of salesforce.com (CRM), a provider of customer relationship management services, are also down in the premarket after reporting April-period financials.

On the bright side, shares of Internet radio operator Pandora Media (P), retailer New York & Co. (NWY), and telecommunications equipment company Marvell Technology Group (MRVL) are indicating higher openings on earnings news. Finally, the stock of Dow-30 component Procter & Gamble (PGFree Procter & Gamble Stock Report) is up nicely in pre-market trading, after the consumer products giant said that CEO Robert McDonald will retire on June 30th, and that former CEO Alan George Lafley will resume the top post, as well as the title of Chairman, effective immediately. – 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 - Following Wednesday's late selloff, which had been set in motion by uncertainty generated by comments from the Federal Reserve, and in particular by its Chairman Ben S. Bernanke, in respect to the future of monetary stimulus, the equity market pointed notably lower during the pre-market trading hours yesterday. And, as if on cue, the stocks, also burdened by the issuance of weak economic metrics out of China, specifically manufacturing data, started the latest session noticeably to the downside, falling at one point early in the day to a loss of some 125 points in the Dow Jones Industrial Average.

Now, of course, given the market's stealth advance thus far in 2013, a 125-point drop in that 30-stock composite is not newsworthy. But combined with Thursday's peak-to-trough reversal of some 275 Dow points, the consequent 400-point, or so, comedown in that index is certainly worthy of at least some note.

However, calmer heads soon began to prevail on Wall Street. That consequent stability was perhaps the result of the fact that the selling did not mushroom into a full-fledged rout, as some no doubt had been fearing. In fact, stocks regained their equilibrium in rather short order, and the Dow, and to a lesser degree the NASDAQ, managed to gingerly enter the plus column for a brief time in the afternoon.

Indeed, the market's ability to recover its poise was rather reassuring, especially in light of how far and how fast the market has risen this year in what could best be termed an unprepossessing global economic backdrop. The dip, meanwhile, served to give some investors who had missed at least part of the year's rally, some brief opportunity to get back into the market.

Also helping stocks to steady themselves were a pair of economic reports that showed some welcome resilience to the recovery. Of note, the Labor Department announced before the financial markets had opened that initial jobless claims had eased back somewhat in the latest week. Then, some 30 minutes into the trading day, the U.S. Commerce Department weighed in with data showing a small gain in new home sales during April. Even more encouraging was the fact that the April gain was off of an upwardly revised March sales figure. Housing demand and home prices have been a reassuring one-two punch in an altogether listless business revival so far in 2013. Finally, computer-making giant and Dow-30 component Hewlett-Packard (HPQFree Hewlett-Packard Stock Report) issued better-than-expected sales and earnings figures for its April quarter after the market had closed on Wednesday, and that stock opened yesterday's session well to the upside and managed to stay there all day, even making a new 52-week high in the process, gaining 17% all told.

However, a decline in manufacturing activity in China during May and the sudden worries that the Federal Reserve could ease up on the monetary accelerator later this year took much of the joy out of the better feelings generated by the more-imposing jobs and housing metrics.

So, stocks wilted a bit near the close. In all, the Dow ended up off 13 points, while the other key averages also largely tracked a bit lower, with more declining than advancing issues on the Big Board underscoring the unimpressive trading tone to the day. On the NASDAQ, however, advancing stocks beat out decliners at the bell, but nominally.

Now, a new day dawns, and following an early rise on the Continent, most of the European bourses are tracking lower, while the equity futures are posting losses on our side of the pond, with the S&P 500 Index futures lower by seven points and the NASDAQ futures in the red by 14 points, presaging a weaker opening this morning ahead of the long holiday weekend. Finally, we note that the bond market will close at 2PM (EDT) this afternoon, while the stock market will be open for normal hours. We hope all of our readers have a happy and safe Memorial Day weekend, as we think back to the brave sacrifices made by so many Americans in uniform over the past two plus centuries.

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