After the Close - A very strong week for equities on Wall Street, one of the best five-day stretches in months for stocks, ended on a modestly positive note thanks to some very late firming, with the major equity indexes trading in a relatively tight band around the neutral line in a session that clearly lacked direction. The NASDAQ added nicely to this week’s gains, which saw the tech-heavy index hit a 12-year high, and the Standard and Poor’s 500 Index also rose. Conversely the Dow Jones Industrial Average was little changed. Some mixed news on both the earnings and the economic fronts (more below) was likely behind the largely uninspiring showing for equities today.

The day’s big news clearly came from the earnings front. Of note, was a very good report from Dow-30 component JPMorgan Chase (JPM - Free JPMorgan Stock Report). The banking behemoth beat expectations on both the top and bottom lines and its shares, which have enjoyed much success this year, extended their gains today. Likewise, fellow banking giant Wells Fargo (WFC) reported good earnings, and the stock responded accordingly. These two reports lent some support to the financial sector, which performed relatively better than the other economically sensitive groups. The basic materials, energy, and industrial components were laggards today—most notably the steels.

Speaking of the economy, the news was mixed. On the positive side was the latest data on producer (wholesale) prices. The report showed that “core” producer prices increased by a benign 0.2% in June, which doesn’t pressure the Federal Reserve to revisit its policy on short-term interest rates. Conversely, we learned that the initial July consumer sentiment reading from Thomson Reuters/University of Michigan fell slightly. That data seemed to weigh some on the consumer discretionary stocks today. Investors also were not pleased to hear from United Parcel Service (UPS) that the package delivery company had lowered its second-quarter profit expectations. UPS’ results, along with those of fellow freight company FedEx (FDX), are used as a gauge to how the overall economy is faring.

Elsewhere, the major European bourses, after trading in positive territory for most of today’s session, sold off in the final hour of trading on the Continent and closed slightly lower. Investors were a bit unnerved by a report that said that Portugal may have to renegotiate the terms of its bailout agreement. Then after the market closed on the Continent, reports surfaced that a major credit rating agency had lowered its credit rating on France’s government-backed debt obligations. Meantime, the Asia’s traders were rather lifeless ahead of Monday’s report on China’s GDP. The GDP data come after a batch of disappointing trade and manufacturing reports for that nation. Investors should note that the economic news on China will probably have an effect on the economically sensitive U.S. sectors, including the basic materials, energy, and industrial groups next week.

Looking ahead to next week, it will be a hectic five-day stretch for investors as earnings season heats up, including reports on 10 Dow-30 companies. We will also receive some important economic data and the Federal Reserve will remain on the minds of investors. Speaking of the Fed, lead bank officials once again gave mixed signals today. St. Louis Fed President Bullard, who is a Federal Open Market Committee voter, said today that he opposes dialing down the Fed's stimulus, while Philadelphia Fed President Plosser, who doesn’t have a vote, said that he believes the central bank should start tapering in September and conclude the program by yearend. Such varied commentary could add to the market volatility over the next few months, especially if the earnings season proves mixed. - William G. Ferguson  

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


12:25 PM EDT - U.S. equity indexes appear to be taking a breather as we progress through the final trading day of the week. At the noon hour in New York, the Dow Jones Industrial Average (fresh off its all-time high set just yesterday), the tech-laden NASDAQ (having scaled a 12-year peak yesterday, as well), and the broader S&P 500 (also flirting anew with record territory) were all hovering around the unchanged mark. The European bourses, meanwhile, were mixed as they closed out their sessions. London was just a fraction above breakeven, while a gain of about half a percentage point on Germany’s Dax was balanced out by a similarly sized decline in France’s CAC 40.

There hasn’t been much in the way of economic news to move the needle today. The Thomson Reuters/University of Michigan’s early reading on consumer sentiment was reported to be down slightly in July, while the core Producer Price Index numbers remained benign, rising just 0.2%.  On the earnings front, JPMorgan Chase & Co. (JPM - Free JPMorgan Stock Report), the largest U.S. bank in terms of assets, cheered investors with its 31% jump in second-quarter profits. And Wells Fargo & Co. (WFC), the country’s largest mortgage lender, also chimed in with a better-than-expected earnings increase of 20%.

Looking at the bigger picture, however, the Federal Reserve continues to drive the markets. Specifically, Chairman Ben Bernanke’s recent comments indicating that the central bank was not yet ready to begin easing up on its $85 billion a month bond buying initiative were a key catalyst behind the U.S. indexes’ surge to higher ground yesterday. A similar sigh of relief went out across the globe, as European and Asian markets all gained ground in the wake of Mr. Bernanke’s update.

With the Fed apparently on hold, at least until late this year, the focus will likely return to economic fundamentals next week, as we await the latest reports on consumer prices, new home starts, industrial output, and retail sales, as well to earnings, which will be out en masse. -Mario Ferro

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 SurveyFinancials are in the spotlight today, as two of the nation’s largest banks, JPMorgan Chase (JPMFree JPMorgan Stock Report) and Wells Fargo (WFC), reported second-quarter results this morning. Both institutions delivered better-than-expected earnings, and each equity is up modestly ahead of the bell, as a result. Elsewhere, shares of WebMD Health (WBMD) are soaring in the premarket, after the healthcare information provider increased its full-year 2013 top- and bottom-line forecasts, thanks to increased demand for advertising and sponsorship services. On the other hand, Valero Energy (VLO) stock is indicating a slightly lower opening this morning, after the oil refiner announced second-quarter earnings guidance that fell short of investors’ expectations.

Finally, shares of Radio Shack (RSH) continue to rebound modestly in the premarket. After plunging more than 20% in intra-day trading yesterday on reports that the electronics retailer had hired a financial advisor to help it deal with looming debt maturities and high cash burn, the stock finished the day down roughly 7%. Management appeared to calm investors with a statement saying that it does occasionally hold discussions with investment banks about ways to improve the balance sheet, but that it has “a strong balance sheet with total liquidity of $820 million at the end of the first quarter.” The company went on to say that it is focused on executing its turnaround. – 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 - It appears, for now, at least, to be back to being all about the Fed. Specifically, after several weeks in June, in which comments by  Federal Reserve Board Chairman, Ben S. Bernanke to the effect that the central bank was warming to the idea of slowing down the buying of bonds had served to roil the markets, Wednesday's subsequent remarks by Mr. Bernanke, in which he toned down what many had thought was an atypically aggressive posture, has helped to calm the nerves of some recently frazzled bulls.

In short, the Fed Chairman observed that the bank would be in no hurry to step on the monetary brakes, believing that the economy, albeit on the mend, still has too many holes in it to shift gears all at once. He also intoned that short-term interest rates, which the Fed controls directly via adjustments in the federal funds rate target, would be kept at historically low levels for the ''foreseeable future.''  We take that to mean 2015, or later.

Such musings were all that the earlier-chastened bulls needed to hear. So, after a listless and largely mixed session on Wednesday, which had featured the release of the minutes from the last FOMC meeting on June 18th and 19th, his subsequent clarification of Fed policy, served to spark a dramatic rally from start to finish in the latest session. In fact, the bulls sent the Dow Jones Industrial Average to a triple-digit gain early in the day and rarely budged from that enviable level throughout the day, ending the latest session up near the day's highs. In all, the Dow finished ahead by 169 points, or 1.1%; the Standard and Poor's 500 Index jumped 22 points, or 1.4%; and the tech-heavy NASDAQ, boosted by a number of nifty percentage gains in some high-profile components, surged by 58 points, or 1.6%--a 12-year high. Winning stocks, as one might expect, overwhelmed losing issues to the tune of better-than-six-to-one on the Big Board. In all, the Dow and the S&P 500 Index are back near their May highs, after a moderate selloff in June.

In addition to the Fed, there was one economic issuance of note yesterday morning, but it clearly did not help the bullish case, as the government reported a surprising increase in initial jobless claims for the latest week. However, such layoffs remain at a level that should not encumber job creation to any degree. The climb in non-farm payrolls so far this year, which works out to a monthly average of just over 200,000, is sufficient, we believe, to help to gradually lower the current lofty 7.6% unemployment rate. The Fed will, by definition, be keeping a watchful eye on the jobless level as it contemplates a slow modification in monetary policy.       

Meanwhile, the relative paucity of economic and profit news is now coming to an end, first because the economic beat is picking up with data scheduled for issuance later this morning on consumer sentiment and next week on retail sales, consumer prices, industrial production, and housing starts, and second since quarterly earnings are due to start coming out en masse very shortly. As to releases thus far, we have seen a compelling report from JPMorgan Chase (JPM - Free JPMorgan Chase Stock Report) issued earlier this morning. However, the stock, which has been strong lately, and is trading at multi-year high, is suggesting no better than a slightly higher opening this morning. At the same time, the government has just reported a sharp rise in headline producer prices, reflecting the recent run-up in energy costs. The notable uptick was expected, and has not cooled off the market, judging by the narrowly positive action in the futures. In all, Wall Street seems poised to turn in its best week in eight months. Finally, it is not just stocks that are rallying, but also gold, bonds, oil, and metals. – Harvey S. Katz

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