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After The Close - Volatility seems to be picking up on Wall Street, with the swings in trading becoming a bit more pronounced in recent days. Yesterday’s strong statement by the bulls was matched in the latest session by a bold move from the bears. Prompting today’s selloff were growing concerns that the U.S. Federal Reserve may soon start to ease up on the economy-boosting stimulus. This notion is based on the recent encouraging data on economy, which included yesterday’s better-than-expected readings on consumer confidence. Historically, concerns that the central bank will begin to tighten monetary policies has had an adverse impact on the stock market, and that seemed to be the case today. Overall, declining issues far outnumbered advancers on both the New York Stock Exchange and the NASDAQ, to the tune of more than three-to-one on the former exchange.

By the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index had retraced most of yesterday’s gains, with respective declines of 107, 21, and 12, respectively. Only some modest midday bargain hunting kept the setback from being even more severe. Overall, nearly all of the 10 major sectors struggled, with the biggest laggards being the consumer staples, utilities, and telecommunications groups. Our sense is that we are witnessing some rotation out of the higher-yielding stocks, which have performed well in 2013, and into the more cyclical names that seem to perform better when the economy is improving. As noted, the latest data on consumer confidence, housing, and employment would suggest that the economy is moving forward, if only at a guarded pace right now. The growth sensitive sectors, including the energy, financial and technology stocks, put in a mild rally in the second half of the session and were the reason why the overall market was able to pare a portion of the earlier heavy losses. However, the same could not be the said for oil prices, which continued to weaken as the day progressed, finishing just above $93 a barrel on the New York Mercantile Exchange today.

Meantime, the major European bourses did not show the same kind of resilience that their U.S. counterparts exhibited with their mild second-half loss retracement. The European bourses were weak from the get-go and remained that way until the closing bell on the Continent. Germany’s DAX, France’s CAC-40, and Britain’s FTSE-100 finished 1.7%, 1.9%, and 2.0% lower, respectively, with the selling rather broadbased. The primary culprit in the euro zone also was concern over the possibility that the U.S. Federal Reserve will step on the brakes with regard to monetary easing. Too, European investors were unnerved by weaker-than-expected German labor data and a downbeat growth update from the Organization for Economic Cooperation and Development.

Looking ahead to the final two days of the trading week, the U.S. economy will remain the focus of the investment community. A revision to first-quarter GDP and the latest data on weekly initial jobless claims are due tomorrow, while Friday will bring data on personal income and consumer spending. On the earnings front, the news will remain light, with the only notable reports coming from retailers Big Lots (BIG), Express (EXPR), Jos. A. Bank Clothiers (JOSB), and Guess (GES), and mining equipment manufacturer Joy Global (JOY).   - 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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12:40 PM EDT - The stock market headed lower this morning, and has so far been unable to recover much ground. It will be critical to see if bargain hunters move in to support equities later in the day, or if the market sells off further. At just past noon in New York, the Dow Jones Industrial Average is down 119 points (-0.8%); the broader S&P 500 Index is lower by about 13 points (-0.8%); and the tech-heavy NASDAQ is shedding 22 points (-0.6%). Market breadth is quite negative, with declining stocks swamping advancers by about 4 to1 on the NYSE.

A look at the market sectors can be quite telling, and seems to suggest that fears about possibly rising interest rates, or a reduction in the Fed’s asset purchases, could be driving today’s weakness. The utilities, often known for their stability, are off sharply, as are the real-estate trusts. Ultimately, these issues are often held for dividends, and may be hurt if interest rates firm up. The same concerns may explain declines in the homebuilders and the mortgage operators. Meanwhile, there is some strength in the gold miners, as hard assets may look more attractive. Notably the price of gold is up to $1,389 an ounce, although, it is still much lower than the $1,700 range hit in late 2012.

Technically, the S&P 500 Index made a rally attempt yesterday, but we are seeing no follow-through today. Also, yesterday’s move was not accompanied by very strong trading volumes. With this morning’s drop, the index has been pushed through the 1,650 mark, an area of some support. If we move lower from here, the index may find some support at the 50-day moving average, located at 1,595, just about 3% lower than the current level.  The VIX is moving slightly higher today, and now is at about 15.

Meanwhile, there were no major economic reports released in the U.S. today. But, tomorrow, we get a look at the employment situation, as the weekly initial and continuing jobless claims figures are released. Ironically, if those figures show improvement investors my get concerned about interest rates again. We also get revised GDP figures for the first quarter, and pending home sales data for April. Further down the road, the Government’s employment report for the month of May is coming out next week and that will be telling.

There are some stocks in the news today. In retail, Michal Kors (KORS) posted better-than-anticipated profits and that issue is moving higher. Things are not going as well for Chico’s (CHS), as that retailer’s stock is slumping on a weak report.  - 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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11:15 AM EDT - The stock market is headed notably lower as we push into the final hour of the morning on the East Coast, as the leading averages, off throughout the session, are now heading still further into negative territory as the session wears on.

The impetus for this reversal following another round of record highs yesterday, are fresh worries among some jittery U.S. investors that recently stronger economic metrics on our shores could be presaging a move to slow down the rate of monetary stimulus being launched by the Federal Reserve.

Such concerns had initially surfaced last week, and that helped to drive the market somewhat lower leading up to the Memorial Day Weekend. But yesterday, those worries seemed to abate, and stocks soared anew on optimism about the U.S. economy. Now, suddenly, the earlier fears are surfacing again.

All told, the Dow Jones Industrial Average is now at its session's low, and is off by about 175 points, while the Standard and Poor's 500 Index is in the red to the tune of 19 points. The NASDAQ, meantime, is tracking some 36 points lower, with the small-and mid-cap indexes being even weaker on a proportionate basis. Losing stocks, meantime, are ahead of winners on the Big Board by some four-to-one, with the ratio a less-troubling, but still appreciable, two-to-one on the NASDAQ. It is not a pretty picture for the bulls at this hour. - Harvey S. Katz

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 – Shares of meat producer Smithfield Foods (SFD) are soaring in the premarket this morning, on news that the company is close to reaching a deal to sell itself to industry peer and China-based Shineway for a reported $5 billion. Also, Stewart Enterpr. 'A' (STEI), a funeral home operator, has entered into an agreement to be acquired by fellow funeral services provider Service Corp. Int'l (SCI) for approximately $1.1 billion in cash. STEI stock rose sharply early this morning following the announcement, while shares of SCI got a moderate boost in premarket trading.

In earnings news, Michael Kors Hldgs. (KORS), the clothing and accessories retailer, turned in a solid fiscal fourth-quarter performance, sending its stock slightly higher in early morning trading. Shares of grocer Fresh Market (The) (TFM) were also up in the premarket on a strong quarterly earnings report. Meanwhile, Chico's FAS (CHS) stock slipped before the bell, after the apparel retailer reported disappointing April-period results. – Kathryn M. Drew

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 both the Dow Jones Industrial Average and the Standard and Poor's 500 Index. All together, on a day in which optimism was in full bloom, as central bankers in both Japan and Europe pledged to continue supporting their respective economies with additional stimulus, no matter what the U.S. Federal Reserve does, the stock market went surging from the opening bell. At one point, in fact, the Dow had sped to an intraday gain in excess of 200 points, while the NASDAQ was better by some 55 points.

However, the bulls seemed to run out of steam during the mid-afternoon, and the one-time 218-point gain in the Dow fell back into the high double-digit range. Then, some modest buying during the final minutes of trading managed to help put the brakes on that half-hearted profit taking, and stocks finished the initial session of this holiday-shortened week with a bit of momentum.

Specifically, at the close, the Dow Jones Industrial Average was still ahead by 106 points, while the NASDAQ in the plus column by almost 30 points. Gaining stocks also held service, beating out decliners by almost three-to-two on the Big Board and by better than two-to-one on the tech-heavy NASDAQ. Save for the high-yielding utilities and the telecoms, the various individual sectors mostly did quite well. Investors, it seemed, were again shedding the more defensive- and higher-yielding stocks, and taking on more risk, which is often the case following an extended rally, such as we have seen thus far this year.

Also helping the markets on our shores yesterday were a pair of positive economic reports, notably data showing another sharp increase in consumer confidence. That survey, issued by the Conference Board, soared above 73 in May, up from just over 69 in April. That gauge of the public's optimism has been rising strongly over the past two months, following an extended up-and-down stretch during the preceding year. Also, a report was out yesterday showing another leap in home prices. That sector, long on the defensive, has been really on fire over the past year, and indications are that further gains lie ahead.

Now, this morning, a new day and a new mood are being experienced in the world's financial markets, as red arrows are in place across Asia and Europe so far today, while our futures are selling off, with the S&P 500 Index futures now off nine points and the NASDAQ futures lower by 14 points. Even then, however, these two metrics are somewhat off of their worst levels of the morning.

Pushing stocks lower across the globe, apparently, are concerns that perhaps the upbeat U.S. data issued yesterday and in recent sessions could yet influence the Federal Reserve to more quickly abandon its bond-buying endeavors. We think such fears are overblown, as the one key barometer used extensively by the Fed in formulating monetary strategy, the unemployment rate, remains distressingly high at 7.5%. It is that number, and the potential to limit the overall strength of the business advance, which is likely to keep the Fed ever-vigilant, in our opinion. Also of concern is a move by the International Monetary Fund to lower its growth forecast for China in 2013 from 8.0% to 7.75%.  

Thus, we could move a bit lower at the opening on Wall Street in about a half hour from now. But unless there is additional cause for selling, our sense is that the move lower will be contained and relatively brief. – Harvey S. Katz

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