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After The Close - Stocks put in a quiet session today as investors awaited tomorrow’s big monthly government employment report. At the close, the Dow Jones Industrial Average was up a slim six points and the NASDAQ was ten points to the good. Market breadth was biased slightly to the downside on the New York Stock Exchange, although winners outnumbered declining issues by three-to-two on the NASDAQ.

The morning started out on a positive note, with solid economic data overall providing a firm underpinning. The Labor Department’s weekly initial unemployment claims figures indicated 9,000 fewer filings than the prior week, suggesting the tone of the job market remains moderately upbeat. Meantime, a payroll report from Automatic Data Processing (ADP) showed that 176,000 private sector jobs were added in August. That is about the same overall figure the government data is expected to disclose on Friday.

Elsewhere, the release of a non-manufacturing (mainly services) index for August by research group ISM came in above expectations and a report on factory orders for July, although down somewhat, was not as weak as had been expected.

Those positives sent the Dow to an early gain of 56 points, but caution ahead of tomorrow’s big jobs report and possibly some concern that good economic data might allow the Federal Reserve to soon reduce the massive amount of monetary stimulus it has been providing melted away most of the advance.
Rising bond yields provided by the favorable economic data also offered resistance for stocks as the session wore on. The yield on the 10-year Treasury note rose to 2.98%, its highest level in two years. Higher bond yields are behind the recent surge in mortgage rates. Government agency Freddie Mac reported today that the average rate on a 30-year home loan has risen to 4.57%, the highest in two years. Even so, mortgage rates remain extremely attractive on a historical basis.

Among the stock market’s various sectors, energy stocks were stronger than most, with the price of a barrel of crude oil higher by over $1 on the New York Mercantile Exchange. That helped to lift the shares of oilfield services stocks, such as Schlumberger (SLB) and Halliburton (HAL).

Industrial stocks also fared comparatively well, with shares of Kaydon (KDN) one of the day’s leading performers. Sweden’s SKF has agreed to purchase the metals manufacturer for $1.25 billion.

Tomorrow morning brings the closely watched monthly government employment report at 8:30 A.M. EDT. What it reveals about the job market will almost certainly effect stock trading early on.   - Robert Mitkowski

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

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12:20 PM EDT - The bulls on Wall Street look like they want to make it three up sessions in a row. As we cross the noon hour in New York, the major equity indexes are trying to hold on to their early morning gains, led by the tech-laden NASDAQ, which is up by about a quarter percent. However, the Dow Jones Industrial Average and the S&P 500 are only marginally on the plus side.

Stocks were doing a bit better earlier in the day; that is, until some good news came out. Specifically, the Institute for Supply Management reported that the non-manufacturing (service) sector continued to expand in August, clocking in at a faster pace than expected and 260 basis points above the prior-month’s reading. Meanwhile, Automatic Data Processing (ADP) provided an early read on the job market, with its National Employment report showing that August payrolls rose by 176,000. (The Labor Department will issue its report on U.S. labor statistics tomorrow morning.)

The markets, seemingly counter-intuitively, backpedaled a bit after these positive reports. The reason being that any indication that the U.S. economy is gaining better footing provides more incentive for the Federal Reserve to cut back on its bond-buying initiative. That would remove a large source of support for bond prices, which would increase bond yields. And that, in turn (all else being equal) would not be a positive for owning stocks. 

Across the pond, trading action was decidedly more positive at the European exchanges. Investors there reacted favorably to the European Central Bank’s announcement that it was raising its forecast for the euro zone economy. Where it was initially looking for a contraction of 0.6%, it now targets a decline of only 0.4% in 2013. Also, the European Central Bank President, Mario Draghi, reaffirmed that official rates would remain at or below their current levels for some time. The major markets were all up, led by a 0.75% gain in London’s FTSE. France’s CAC-40 was not far behind with its half percent advance, while Germany’s DAX was showing about a quarter-percent gain.  -Mario Ferro

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 – The drumbeat of earnings has slowed somewhat, but investors still have plenty to digest. A new jobs report from Automatic Data Processing (ADP) came out earlier this morning that showed private-sector payrolls increased by 176,000 in August.

In company specific news, beleaguered BlackBerry Ltd. (BBY) announced that it intends to run a fast auction process that could be wrapped up by November. Also, the beginnings of our next cable TV dispute got some headlines, as it appears that Dish Network (DISH) and Walt Disney’s (DIS - Free Disney Stock Report) ESPN will battle it out for a renewal pact by the end of September. The immense popularity of ESPN may render this dispute a one-sided affair, however.

Elsewhere, LinkedIn (LNKD) plans to sell $1 billion worth of stock in a secondary offering two years after one of the most successful social-media initial public offerings to date. In other news, Bank of America (BAC - Free Bank of America Stock Report) sold a $1.47 billion stake in China Construction Bank on Wednesday, the latest foreign institution to shed its investment in a China-based lender after initial optimism about the potentially lucrative market wore off. – Erik M. Manning

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 - The U.S. equity market has done a fairly good job of reversing last week’s losses during the first two sessions of this abbreviated trading week. Once again, the situation in Syria is driving the direction of trading. Last week, the major equity averages fell sharply on fears that a Western-led airstrike against Syria could cause a disruption in worldwide oil supplies, while this week the delay of a U.S.-led response and some bickering among Congressional leaders on Capitol Hill about the scope of such an attack, the latter of which could lead to military inactivity, has eased investors’ concerns, at least for the moment.

The unresolved issues over Syria played a significant role in yesterday’s outsized gains, which, as noted, helped the major equity averages retrace a good portion of last week’s setback. In fact, the broader S&P 500 Index, helped by yesterday’s 13-point climb, was up 1.3% the last two days after a 1.8% setback last week. The Dow Jones Industrials and the NASDAQ Composite have also fared well the last few days, punctuated by yesterday’s respective gains of 97 and 36 points.

Yesterday, the U.S. equity market was led higher by technology, financial, and consumer discretionary stocks. In the technology space, the stocks of industry heavyweights Apple (AAPL) and Google (GOOG) turned in nice performances, with investor optimism growing ahead of the former’s forthcoming expected release of new product innovations. Samsung, a major competitor of Apple, got the ball rolling yesterday, announcing that it will unveil upgrades to its smartphones and a new smart watch called Galaxy Gear on September 25th. Meantime, the automobile stocks, including shares of General Motors (GM) and Ford Motor (F), performed well after the release of monthly auto sales data. That report showed that the automobile industry had its strongest month since just before the start of the last recession.

In addition to the aforementioned Syria news, the market has been helped the last few sessions by some encouraging economic data. On Tuesday, the Institute for Supply Management (ISM) reported that manufacturing activity expanded last month at its fastest pace in more than two years. Then yesterday, although the U.S. trade gap widened last month, the component parts of the report suggested that the U.S. economy is continuing to firm. At 10:00 A.M. (EDT) today, we will get the ISM’s companion report on nonmanufacturing (services) activity for August. Then tomorrow morning, the much-anticipated monthly report on the nation’s labor market will be released. (Just minutes ago, Automatic Data Processing (ADP) announced that private-sector payrolls increased by 176,000 in August.)  That data could be a game changer, as it may have an impact on the Federal Reserve’s thinking at its next monetary policy meeting, which is scheduled for September 17th and 18th. The growing sentiment is that the central bank will announce some kind of cutback in its quantitative easing measures following the FOMC meeting. Our sense is the breadth of any possible reduction in bond-buying activity will determine how forcefully investors react to the policy change.

Meantime, with less than an hour to go before the commencement of trading on these shores, the futures are flat for the U.S. equity market.  (Investors should note that the major equity indexes in Asia finished higher overnight and the European bourses are in positive territory as trading enters the second half on the Continent.) It could also be a slow opening for the U.S. market, as investors, following yesterday’s outsized gains, may be hesitant to take additional sizable positions ahead of the aforementioned forthcoming important reports on the economy. As noted, that data may determine if or how much the U.S. Federal Reserve pulls back on the asset purchases that have kept the markets flush with cash. Investors should note that both oil prices and the yield on the 10-year Treasury note are inching higher already this morning. The latter could prompt some more sector rotation out of higher-yielding equities. The increased yields on the less risky fixed-income securities are making the higher-yielding stocks less attractive these days. – William G. Ferguson

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