After the Close - For the first time in five trading sessions, investors had something to cheer about, as most of the major U.S. equity averages pressed forward. There seemed to be some broadbased bargain hunting following four straight losing sessions on Wall Street. Helping the bulls mount a comeback was some encouraging news from Corporate America, which included a number of positive quarterly earnings reports from the retailers (more below). When all was said and done, the NASDAQ, and the broader S&P 500 Index were nicely higher, while the Dow Jones Industrials on weakness from a few members finished nominally lower. Meantime, the outsized gains in the small-cap Russell 2000 Index and the S&P Mid-Cap 400 Index also suggests that investors are not yet opposed to adding some risk to their portfolios. Overall, advancing issues led decliners by a sizable margin on both the Big Board and the NASDAQ.

As noted the buying was pretty encompassing, with all of the 10 major sectors finishing the day nicely higher. Leadership came from the basic materials, financial, utilities, and consumer discretionary stocks. The latter group got a nice boost from the retailers, as industry members Home Depot (HD Free Home Depot Stock Report), Best Buy (BBY), TJX Companies (TJX), and Urban Outfitters (URBN) all reported positive quarterly earnings results—though shares of Home Depot finally ended a bit lower. Conversely, shares of struggling book-store chain Barnes & Noble (BKS) tumbled after the company posted a 10% decline in sales at its bookstores and bn.com website and founder and Chairman Leonard Riggio said he has scrapped plans to make an offer for B&N's retail business. Although earnings season has largely concluded, a few more prominent retailers, including Lowe’s Companies (LOW), Target (TGT), and The Gap (GPS), are on the docket the next few days. Investors should also note that computer giant and Dow-30 member Hewlett-Packard (HPQ Free H-P Stock Report) is scheduled to release its latest quarterly results after the close of trading tomorrow.

Speaking of tomorrow, the investment community’s focus will be on the minutes from the last Federal Open Market Committee meeting, which should be made public around 2:00 P.M. (EDT). Investors will scrutinize the minutes for clues about when the Federal Reserve plans to begin tapering its bond purchases. The quantitative easing subject has been a hot-button topic for investors since Chairman Bernanke suggested in late May that the central bank may begin stepping on the monetary policy brakes later this year, as possibly as early as next month. The direction trading takes tomorrow afternoon could hinge on what the minutes say. We also get the latest data on existing home sales tomorrow.

Meantime, the price of oil fell again today, falling more than 2% as traders waited for the U.S. Central Bank to signal when it will start scaling back its bond-buying activity. In recent years, the accommodative monetary policies have pushed interest rates to record lows and in the process made crude oil and other commodities a more attractive investment by offering potentially higher returns. A pullback in the Fed’s stimulus measures, which could happen as early as next month, could push oil prices down. In addition to the decline in oil prices today, the agricultural and soft commodities—which included notable setbacks for coffee and cotton futures—were sharply lower ahead of the Federal Reserve’s release.

Looking ahead to tomorrow, our sense is that trading will be rather light ahead of the Fed’s release, as investors will likely be hesitant to take any notable positions. After that, trading will most likely be guided by what the minutes from the Federal Open Market Committee reveals. If the Fed hints that a cutback in bond buying will commence next month, the bears may well return in a big way. Stay tuned. – William G. Ferguson 

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


12:20 PM EDT - The U.S. stock market is moving higher today in a solid rebound following four straight losing sessions, although, it remains to be seen if the bulls can sustain their buying campaign through the afternoon. Over the past few sessions, we have seen half-hearted attempts to support the market ultimately lose steam, which is certainly not encouraging for the bulls. Meanwhile, at just about noon in New York, the Dow Jones Industrial Average is up 63 points; the broader S&P 500 Index is higher by 12 points; and the NASDAQ, which is once again outperforming the other averages, is pressing forward by just over 35 points. Today’s rally has some underlying support, too. To wit, market breadth is favorable, as advancers are ahead of decliners by better than 2 to 1 on the NYSE. Most of the market sectors also are participating in the up move. There is strength in the utilities, for example, while the healthcare stocks are in favor, thanks to gains in the biotech and pharmaceutical names. The consumer issues also are showing some leadership. Finally, there are notable advances in the retail stocks, as the S&P Retail SPDR (XRT) is up better that 1%. In contrast, the industrial issues are lagging today, while the financials are weak relative to other areas of the market.

Technically, the S&P 500 Index has slipped for a series of consecutive sessions, and is now just at its 50-day moving average at 1,657. Hopefully, the market can firm up from here and reclaim that widely watched technical level. Given the selling that has ensued over the past few days, conditions have likely moved towards being slightly oversold, inviting bargain hunting. The VIX is a bit lower today, too, suggesting that the mood is less apprehensive, at least for now.

As was the case yesterday, there has been limited economic news out so far today. However, tomorrow, things pick up, as we will get a look at the existing home sales for July. Further, the FOMC releases the minutes from its July meeting. That report, will no doubt, be the center of attention, given trader’s concerns about Fed policy, and the direction of interest rates. On a related subject, there has been some buying of Treasuries, today, as the yield on the 10-year note has eased to o 2.83%, following a brief jump to 2.90% yesterday.

Finally, as to individual issues, there were a number of retailers that reported results this morning, and that may be partly behind the nascent rally. Decent reports from Best Buy (BBY), Urban Outfitters (URBN), and TJX Companies (TJX) are pushing those names higher. Home Depot (HD -Free Home Depot Stock Report) put out a decent report too, but investors do not seem moved and the stock has barely moved. -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 SurveyToday is all about retailers, as a slew of these companies reported July-period results last night and this morning, and the trend was positive, overall. Leading the charge was The Home Depot (HDFree Home Depot Stock Report), the world’s largest home improvement retailer, which delivered better-than-expected  results thanks to the recovery in the housing market and a rebound in sales of seasonal items. The stock is up nicely in the premarket as a result. Investors also were impressed with quarterly results from Urban Outfitters (URBN), The TJX Companies (TJX), J.C. Penney (JCP), and Best Buy (BBY). These three stocks are indicating higher openings this morning, with URBN and BBY showing considerable strength.  

It was not all good news, however, and shares of bookstore operator Barnes & Noble (BKS) and sporting goods retailer Dick’s (DKS) are both indicating moderately lower openings this morning on earnings news. – 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 - The stock market, on the heels of one of its worst week to date in 2013, started the new five-day stretch to the downside, as well, falling from the outset, before making some half-hearted and ultimately unsuccessful attempts to turn higher over the course of the day. Indeed, by the close, the leading averages were all near their nadir for the session, while the ratio of advancing stocks and declining issues on both the Big Board and the NASDAQ deteriorated over the course of the day.

All told, the Dow Jones Industrial Average dropped 71 points, settling in just a handful of points above its session low, and only some 10 points above the 15,000 level, which, if broken, would likely further embolden the bears. All told, the Dow is now some 650 points below its all-time high set on August 2nd. The Standard and Poor's 500 Index also fell back, losing 10 points, while the NASDAQ, up more than 20 points earlier in the day on strength in selective tech issues, finally joined in on the selling late in the day, closing down 14 points. The small- and mid-cap indexes did proportionately worse, as investors again shunned risk.

Behind this selling, which has now gone on for four days in a row, is the evolving fear that the Federal Reserve will notably slow the pace of its bond-buying program as early as next month. A pullback in this popular effort could take a notable prop from the business upturn and further raise interest rates. Already, the yield on the 10-year Treasury note had climbed to 2.88% by yesterday's close, although it is edging lower, to 2.81%, in the early going this morning. It had touched  2.90% briefly yesterday, while the yield on the companion 30-year Treasury bond rose to 3.90%. Here, too, there has been some backtracking this morning. The higher rates, if sustained, could not only crimp the housing market, which has been a welcome support for the economy over the past year, but also take some funds from stocks and put them into fixed-income vehicles.

This moderate selling, meanwhile, took place on a day of light news, as the most recent earnings season has just about concluded, and we did not have any economic issuances of note. The paucity of news will again be the rule today, save for some earnings reports from key retailers, but things start to pick up again tomorrow, when we will get data on sales of existing homes and the release of the minutes from the last Federal Reserve FOMC meeting. Those releases will be followed by surveys on jobless claims, new home sales, and the leading indicators during the morning on Thursday.

As to the market, the selling so far has been contained, and while the near-term trend has been lower, there has been no panic unloading of stocks, as yet. For now, we are seeing some caution, with the VIX volatility index, which troughed at 11.05 earlier this year, now only up at 15.10. That is still well off the yearly high of 23.23, and is less than a third of what it was at the bear market's nadir more than four years ago. So, even with the selling thus far, the market is not especially oversold, and could descend further, especially if interest rates were to continue rising, or unsettling comments were to come out of the Fed.

Meanwhile, we look ahead to a new day on Wall Street, and find that the market around the globe are working lower, having fallen overnight in Asia, and showing modest losses through the first half of the day in Europe. As to our outlook, we have seen some upbeat earnings from a few retailers today, notably from Dow component Home Depot (HDFree Home Depot Stock Report) and from electronics retailer Best Buy (BBY). Both stocks are moving nicely higher in pre-market action. As to our market, the futures, after selling off earlier this morning, have turned nicely higher suggesting some early buying on our shores. – Harvey S. Katz                

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