Loading...

After the Close - Investors took a bit of a breather today after last week’s volatile, and at times extremely frenetic, five-day stretch that culminated with Friday’s strong showing by the bulls. The lack of any major news on the corporate and economic fronts was likely behind today’s malaise. The market traded in a tight band around the neutral line for much of the session. Overall, it was a mixed showing as advancers led decliners on the NASDAQ, while the latter group held the upper hand on the Big Board. At the closing bell, the Dow Jones Industrial Average and the S&P 500 Index were off slightly, while the NASDAQ and the small-cap Russell 2000 were modestly higher.

There were no big moves made by any of the top-10 sectors on a low volume day. On the plus side, were the healthcare, telecommunications, and technology groups, which had a lot to do with the NASDAQ’s outperformance relative to the Dow 30 and the S&P 500 Index. Conversely, the energy and consumer discretionary sectors were among the laggards today. The coal and steel stocks, which have suffered mightily over the last 52 weeks, were once again under pressure. 

As noted, it was a very quiet day on the economic beat. That will remain the case over the next few days before the release of the latest monthly data on retail sales this Thursday. Then on Friday, we will receive two more notable reports, including data on producer (wholesale) prices and industrial production. The final day of the trading week will also bring the latest Thomson Reuters/University of Michigan survey of consumer sentiment. Recent economic reports, including the data on employment and nonmanufacturing activity, have been decent, but certainly not strong enough to think that the Federal Reserve would begin to ease off on its bond-buying program during its next two-day FOMC meeting that commences next Tuesday.

Indeed, talk of the central bank putting the brakes on its stimulus measures as early as this month, has seemed to quiet down, at least for the moment. This has pulled some skittish investors back into the equities the last few trading days. Our sense is that the near-term actions of the Federal Reserve will remain the focus of the investment community until earnings season begins in mid-July.

The economic news from overseas could be termed mixed. Overnight, we learned that Japan’s economy grew at an annualized rate of 4.1% in the first quarter, which exceeded the consensus expectation of a 3.5% advance. The data also helped reassure skittish investors that Prime Minister Shinzo Abe's aggressive stimulus measures are helping the world’s third-largest economy. Japan’s stock market indexes jumped sharply, led by a 4.9% advance by the Nikkei 225. However, the news from China was not as encouraging, as a batch of data hinted that growth in the world's second-largest economy weakened slightly in May. Specifically China’s imports fell 0.3% and exports posted their lowest annual growth rate in almost a year in May, at 1%. China’s main equity indexes, though, finished the latest session modestly higher.

Meantime, the news from the euro zone was semi-encouraging, as the Central Bank of France said that its nation’s economy will grow slightly in the second quarter and a rise in the country’s factory output helped underscore that forecast. France’s CAC-40 Index finished the day nominally lower, while Germany’s DAX and Britain’s FTSE-100 were higher on a report that investor sentiment in the euro zone improved last month.  – William G.  Ferguson

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

-

12:35 PM EDT - The stock market opened higher this morning, pulled back sharply about an hour into the session, but is now advancing. At just past noon in New York, the Dow Jones Industrial Average is up 29 points (0.2%); the broader S&P 500 Index is ahead four points (0.3%); and the NASDAQ, which is showing some leadership, is tacking on 16 points (0.5%). Market breadth still shows a somewhat mixed market, as advancing stocks are about even with decliners on the NYSE. A quick look at the major market sectors also reveals a fragmented market. There is strength in the technology and healthcare names, while the basic materials, energy, and utilities stocks are weak.

Technically, the S&P 500 Index is looking to extend Friday’s bounce. That move was accompanied by decent trading volumes, which is encouraging. If the index moves higher from here, it could hit some resistance at about 1,650, which was a crucial area of prior support in late May, and beyond that the 1,675 area could be a level that could be hard to move through, as well.

Traders here in the United States may have gotten some help from the overseas markets. In Asia, Japan’s Nikkei jumped almost 5% overnight. An upwardly revised first-quarter GDP figure for that country likely helped sentiment. Meanwhile, in Europe the bourses are closing out a largely mixed session. Britain’s FTSE and Germany’s DAX have been advancing, while there has been some weakness on France’s CAC-40.

The economic news has been quite today. However, S&P lifted its outlook for the U.S. to stable, where it had been negative, and that may be helping investor sentiment. Tomorrow will also be a light day for reports. However, we will get a look at wholesale inventories for the month of April.

In corporate news, shares of McDonald’s (MCD - Free McDonald's Stock Report) are trading higher, after the hamburger chain reported encouraging same-store sales figures for May. Also, Apple (AAPL) stock, which has fallen sharply from its 52-week high of $705, is moving up modestly today. That company is holding a major development conference, and investors may be anticipating new product introductions that could reignite confidence. Elsewhere, there was a bit of M&A activity today, which investors always seem to find encouraging. Specifically, AstraZeneca (AZN) has agreed to purchase Pearl Therapeutics for about $1.1 billion. -Adam Rosner

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

-

Stocks to Watch from The Survey Earnings news is very light ahead of the bell today, though a few notable companies, such as athletic apparel retailer lululemon (LULU) and nut and snack producer Diamond Foods (DMND), are scheduled to report quarterly financials after the market closes today. Meanwhile, shares of McDonald’s (MCDFree McDonald’s Stock Report) are up modestly in pre-market trading, after the restaurant operator and Dow-30 component announced better-than-expected May sales figures. Apple (AAPL) stock will likely see active trading today, too, as the computer and personal electronics company is set to host its annual Worldwide Developers Conference later today. New versions of the company’s operating systems are expected to be unveiled, as well as a radio service to compete with the likes of Pandora Media (P) and Spotify. – 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 - Dull, ordinary, and uninspiring, each of which could well describe the latest monthly report on the U.S. employment situation, evoked anything but a lackluster response on Wall Street this past Friday. In fact, just the opposite was true, as that non-threatening jobs issuance really got the bulls rolling in the latest market session.

To wit, after the release of this ho-hum report, which showed that the nation had added 175,000 jobs in May, just narrowly above expectations, and that the jobless rate had ticked up from 7.5% to 7.6%, after a flattish reading had been the consensus forecast, the markets rallied abruptly and vigorously, maintaining that strong momentum throughout the session.

In all, the Dow Jones Industrial Average soared by 208 points, bringing the recently slumping index back further above 15,000, to a close of 15,248. The NASDAQ climbed 45 points, or just under the percentage gain on the Dow, while the Standard and Poor's 500 Index jumped by 21 points. The big winner on the day, however, was the Dow Jones Transportation Index, which surged by 147 points, or 2.37%, eclipsing by nearly a full percentage point, the gain in the Dow and by more than a percentage point in the other two large-cap indexes cited above. Meanwhile, there were lesser gains in the small-and mid-cap averages, as investors apparently were still shunning greater sources of risk.

What caused this strong rally was the aforementioned employment report, which was strong enough to calm jitters that the nation might be heading for a marked slowdown at this point in the year, and limited enough in strength to assuage fears that the Federal Reserve might be contemplating a notable slowdown in its bond-buying program, a major stimulus effort that had encouraged the bulls over the past couple of years to relentlessly buy equities.

With the near-term Fed fears being calmed for at least a day, the bulls were out in force, producing the second best gain in the Dow so far this year. The report suggested to some that the economy was chugging along in about the same fashion that it has been advancing thus far this year and, in some respects, for much of the now four-year-long business expansion. That is seemingly what the buyers want, and there was no buyers' remorse evolving throughout the latest session.

Now, a new day and week both dawn, and thus far the signals are reasonably good as the global markets are mostly higher, with encouraging, albeit moderate, growth signs in both Japan and our country trumping the continuing slowdown, and worse, in Europe. The confidence on Wall Street thus seems to again be mounting. True, most feel that the Fed will soon act to slow the pace of bond buying. In fact, the consensus is that such a deceleration is not imminent, but could take hold later this year or in 2014. That is a better case for the bulls than for such a slowdown to be taking place at the meeting of the FOMC scheduled for a week from tomorrow and next Wednesday, as some have been fearing.

Now, though, a new week dawns and it will be a light news stretch until this Thursday, when the government will then report on both retail sales for May and the latest weekly jobless claims. Then, on Friday, reports on industrial production, factory usage, producer prices, and consumer sentiment are due out. So, there will be a late rush and fresh challenges in the days to come.

For now, though, things seem to be calm and the equity futures are pointing to a mixed to slightly higher opening when trading gets under way 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.