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After The Close - The major U.S. equity averages, which were notably weak in the first half of the session on concerns about what the minutes from the last Federal Reserve monetary policy meeting would reveal, regrouped shortly after the 2:00 P.M. (EDT) release and quickly fought their way back into positive territory. Our sense is that the release did not offer any new surprises about when the central bank was to begin stepping on the monetary policy brakes and investors took the opportunity to go bargain hunting in a market that was down earlier on the expectation that the report might confirm that the lead bank may begin tapering its bond buying by as early as next month.

However, the late-day push by the bulls did not have much staying power, as the major averages once again quickly fell back into the red, with the Dow Jones falling by 105 points by the closing bell. The vague nature of the Fed release, which still has not provided investors with a definitive date of when the tapering of bond purchases will begin, was likely behind the late day volatility. Our sense is that such volatility could be the norm over the next few trading days, as the news from the earnings and economic fronts will be rather light, save from some quarterly reports from the retailers and the latest data on new homes sales from the Commerce Department. That said, the economic news will heat up next week, with reports due on durable goods orders, consumer confidence, GDP, and personal income and spending.

From a sector perspective, all of the 10 major groups finished in the red, but the losses were of various degrees. Early buying interest in the industrial, consumer discretionary, and technology sectors, with the latter sector giving the NASDAQ a nice boost early in the day and limiting the loss for the composite at the closing bell, was not sustained and those groups finished the session slightly lower. Meanwhile, the basic materials, consumer staples, telecommunications, and utilities sectors suffered bigger setbacks. The latter three groups have been hurt in recent weeks by the perception that the tapering of the Federal Reserve’s bond-buying program will push yields on fixed-income securities higher, making them attractive alternative to and that seemed to be the case once again today.  Indeed, Treasury yields moved higher during the latest session, likely prompting some rotation out of aforementioned groups.        

Looking ahead to the remainder of this week, we would not be surprised if today’s late-day volatility carried over into the final two days of trading. The lack of any headline grabbing news on the earnings and economic fronts will probably keep the investment community focused on what the Federal Reserve’s next move will be. Since late May, the Federal Reserve has been a hot-button topic for investors and at times made for a rollercoaster ride for investors, much like the one that was witnessed over the last few hours of trading today. - 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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12:25 PM EDT - The U.S. stock market is putting in a weak showing today, as far, the bulls seem unable to extend yesterday’s uneven gains. It should be noted that while yesterday’s performance represented some progress, the Dow did retreat late in the session to close in negative territory for a fifth straight session. The Dow has been weaker than both the S&P and the NASDAQ over the past several weeks, and this divergence is somewhat disturbing. Further, the Dow contains many high-yielding components, and given recent interest-rate concerns, that may be contributing to some of the softness. In contrast, The NASDAQ has been outperforming the other averages and it may be that traders are looking for the higher-growth issues. Overall, market breadth has been uninspiring, and that, too, is of concern, as it suggests underlying sloppiness. On a related note, there are now 170 stocks making new lows on the NYSE today versus only 26 making new highs, and this also shows that many issues have been badly bruised. 

At just about noon in New York, the Dow Jones Industrial Average is off 64 points; the broader S&P 500 Index is down seven points; and the NASDAQ is shedding 11 points. Market breadth is negative, with decliners outweighing advancers by over 2 to 1 NYSE. Almost all of the market sectors are slipping, with particular weakness in the utilities and the basic materials issues. However, there is some relative strength in the technology area.

Technically, the S&P 500 Index tried to move above its 50-day moving average at 1,657 yesterday but ultimately closed below that level. Hopefully, for the bulls, the market can stabilize near the current area. But, if we move lower, the index may find some support at its 200-day moving average located at 1,560, which would suggest a fairly deep correction. The VIX is spiking about 8% today, to over 16, suggesting that traders are getting a bit nervous. Meanwhile…

Investors are largely shrugging off the economic news out this morning. Existing home sales came in at 5.4 million units, annualized, in July, which was far better than expected, and above the June level. The fact that this news is carrying no weight with traders suggests there are deeper concerns. Specifically, the big news of the day will be the release of the minutes from the FOMC’s July meeting, due out at 2:00 PM today.

Finally, there were a few earnings reports released this morning. Target (TGT) put out disappointing results and that issue is trading lower. In housing, Toll Brothers (TOL) put out decent results, and that stock is up a bit. - 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 SurveyRetailers are in the spotlight again today, as July-period earnings reports from these companies continue to flow in. General merchandise retailer Target (TGT) delivered July-quarter results that were generally in line with investors’ expectations, but its outlook was disappointing, causing the stock to move modestly lower ahead of the bell. Other stocks are showing significantly more weakness in the premarket on earnings news, including office supplies provider Staples (SPLS) and apparel and accessories retailer American Eagle Outfitters (AEO). It was not all bad news, however, and shares of home-improvement center Lowe’s (LOW) and Citi Trends (CTRN), a seller of urban fashions, are indicating nicely higher openings this morning. – 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 - Wall Street broke its four-day losing streak yesterday and did so rather convincingly, scoring nice across-the-board gains for much of the day, in a session marked by somewhat less volatility than we have seen lately.

Specifically, after a mixed opening, the market firmed up in steady fashion, with the Dow Jones Industrial Average climbing through the morning, cresting with a gain of almost 65 points around mid-session. The Standard and Poor's 500 Index also rose nicely for much of the day, hitting the low double-digit mark at its best reading. The NASDAQ, which has been the clear winner among the large-cap indexes of late, again outperformed, rising by more than 35 points, or better than one percent, at just past noon in New York on selective strength in a core group of high-profile tech names. But the real stars yesterday were the small- and mid-cap composites, which were up by between one and two percentage points at their best levels.

The formidable recovery, which subsided late in the day, with the aforementioned Dow actually edging slightly into the red, reflected some bargain hunting following the recent slide, which had been the most severe so far this year, along with the relief that earnings at some key retailers had come in better than expected. 

As before, however, traders remain nervous about a likely move to slow down the rate of bond buying by the Federal Reserve. Such a monetary shift, which could take place as early as next month, has been feared for weeks now, and has not only contributed to the recent moderate selloff in equities, but also raised the level of bond yields. For example, the yield on the 10-year Treasury note has nearly doubled from trough to peak over the past year, cresting on Monday at 2.90%. It eased slightly yesterday as stocks generally rose, closing at 2.82%. That is where the yield sits this morning.

Meanwhile, it was another day of sparse economic news, just as it had been the day before. But that will change later today, as the National Association of Realtors will issue data on existing home sales for July at 10:00 (EDT). A modest increase from the previous month is the consensus expectation. Then, this afternoon, the Federal Reserve will issue the minutes from its last FOMC meeting. That release could affect trading, as it is likely to give a sense of upcoming Fed plans.

Elsewhere, retail earnings continue to come in this week, following a busy day yesterday, when we had some solid metrics released by Home Depot (HD - Free Home Depot Stock Report) and Best Buy (BBY). The former stock, which is on the Dow-30, however, hardly reacted to the favorable report and outlook, while Best Buy shares rallied nicely and, in fact, have tripled from its 52-week low, setting a yearly high yesterday.        

Looking ahead to this morning, the markets were mixed to lower overseas, as skittishness ahead of the release of the FOMC minutes continues to be high on the agenda of the world's markets. And on our shores, the futures are now suggesting a modestly lower opening for stocks when trading commences in less than an hour from now. The market is clearly worried, and the impact of such concerns is being felt in the recent negative tone to trading. The obvious fear is that a less generous Fed could dampen enthusiasm for a range of consumer purchases, including houses, which are critical to the upturn's sustainability. The higher yields also could, at some point, threaten to siphon monies from stocks and put them into potentially higher-yielding fixed-income instruments. For now, though, the selling has been modest, and the Dow remains within about six percent of its all-time high.   – Harvey S Katz

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