After The Close - The month of September, which has historically been a difficult one for traders, has been anything but as we hit the half way mark. In fact, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index followed up last week’s respective gains of 0.8%, 2.0%, and 1.4% with advances of 3.0%, 1.7%, and 1.5% in the latest five-day stretch. Pushing equities higher over the last fortnight has been some relief, at least for the time being, that a U.S.-led attack against Syria—one that would possibly lead to disruptions in the world’s oil supplies—will be avoided and growing sentiment that if the Federal Reserve does decide to taper its bond-buying program at next week’s FOMC meeting, the scope of such reductions may be limited, at least initially. Some uninspiring U.S. economic data released this morning (more below) seemed to lend some credence to such thinking.

As for today’s session, it was another positive one for the bulls, who have been a mainstay in the winner’s circle over the last two weeks. At the final bell, the Dow Jones Industrials, the NASDAQ, and the S&P 500 Index had added 75, six, and three points, respectively. Today’s modest advance helped the Dow 30 record its second-largest weekly gain of 2013. Overall, advancers finished ahead of decliners on both the Big Board and the NASDAQ, with the spread between winning and losing issues widening a bit in the second half of the trading day.

The news on the economy, which included three notable releases, was uninspiring. Perhaps, as noted above, these lifeless reports—which included a smaller-than-expected increase in retail sales and a weaker-than-anticipated initial September reading on consumer sentiment from The University of Michigan/Thomson Reuters—had investors thinking that if the Federal Reserve does decide to begin tapering its monthly bond purchases at next week’s FOMC meeting, the magnitude of such reductions may be minor at the outset. It should also be noted that inflation, as evidenced by today’s tame reading on producer (wholesale) prices, is not an issue right now for the central bank. Historically, the tightening of monetary policies is not viewed favorably by market participants. The FOMC meeting headlines a busy stretch of economic news next week, which will also bring data on industrial production (Monday), consumer prices (Tuesday), housing starts (Wednesday), and existing home sales (Thursday).

From a sector perspective, not one of the 10 major groups stood out today. There was some mild leadership shown by the consumer staples, industrial, and utilities stocks. Within the consumer noncyclical space, the stocks of the food processing and food distribution companies were in demand, likely prompted by the Producer Price Index report, which showed a notable increase in food prices at the wholesale level. Conversely, technology and telecom stocks were a bit out of favor during today’s session, with technology hurt by some mild weakness in the shares of industry titans Apple (AAPL) and Google (GOOG). In particular, Apple shares have not fared well since investors were disappointed with the company’s new product unveilings on Tuesday.

Looking ahead to next week, the investment community’s attention will be on what the Federal Reserve will do at its two-day monetary policy meeting, which concludes on Wednesday afternoon. Our sense is that barring any major developments in the Middle East, trading could be rather light early in the week as investors may show tentativeness ahead of the Federal Reserve’s announcement. - William G. Fergusson

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

12:15 PM EDT - The U.S. stock market is putting in a mixed performance today. At just past noon in New York, the Dow Jones Industrial Average is up 62 points; the broader S&P 500 Index is adding on four points; but the NASDAQ is shedding one point. Market breadth also suggests a mixed tone to the session, as advancing issues are just slightly ahead of decliners on the NYSE. Further, the market sectors also show a lack of decisive direction. However, there is some strength in the consumer names. The energy issues are also advancing, as the exploration and production names are doing well. Notably, this move comes, even as crude oil is trading a bit lower at $107 barrel. In contrast, there is some weakness in the technology stocks, with declines in the computer hardware makers. The basic materials sector is also lagging, as some metals and coal miners are off a bit.

Technically, the stock market has made an impressive comeback in the first weeks of September. Notably, that advance has come on healthy volumes, suggesting a commitment on the part of traders and large institutions. For now, the market may be taking a breather. Although it has pulled back over the past few weeks, the VIX is moving slightly higher today, and that may suggest that the bulls may be feeling a bit more cautious, for now.

The economic news released today was largely uninspiring. Specifically, retail sales rose 0.2% in August, which was a bit less than had been expected. Further, the University of Michigan’s Consumer Sentiment reading for September came in at 76.8, which was notably weaker than had been anticipated, and was also lower than August’s 82.1 reading.  Elsewhere, inflation seems to be under control, as producer prices came in with a tame reading in the month of August, especially, if we back out food and energy.

In the corporate news, it has been a quiet day for reports. Nonetheless, shares of Ulta Salon (ULTA) are trading sharply higher after the beauty supply retailer released better-than-anticipated quarterly sales and profits. Further, there may be some excitement concerning social media operator Twitter. According to recent filings with the SEC that company may be getting ready for an IPO. - 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 - In what is expected to be a relatively quiet day, there are a couple of names that are worth keeping a close eye on. First, Ulta Salon Cosmetics & Fragrances (ULTA) has been quite active since the closing bell last night. Indeed, the beauty-products retailer enjoyed a double-digit advance in after-market trading, as investors rewarded the company for its better-than-expected second-quarter earnings. Medical and security imaging provider Analogic (ALOG) is another issue that we expect to remain active after the company announced that its fourth-quarter earnings missed the mark, but adjusted earnings improved 16%.

Elsewhere, rumors are swirling that Goldman Sachs Group (GS) will be the lead underwriter for social media company Twitter’s possible IPO. Also, Ethan Allen Interiors (ETH) named Dave Moore chief brand officer. Mr. Moore joins the home furnishing retailer after his time as executive creative director at McCann-Erickson New York. It will be interesting to see Wall Street’s take on the news. – Andre J. Costanza

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


Before The Bell - The latest string of winning sessions came to an end on Wall Street yesterday. But the setback, which included losses in the three major indexes--the Dow Jones Industrial Average, the Standard and Poor's 500 Index, and the NASDAQ--were modest and did little to reverse the steady climb in equity prices over the past week and a half. In all, this latest rally--the stock market's longest since July--was set into motion by strong indications that the West would seek to avoid a military solution to deal with the apparent use of chemical weapons in Syria's civil war. Instead, it would attempt a diplomatic resolution.

The fear a week ago was that the United States, in concert with some of its global allies, would attempt a series of military strikes against Syria. That outcome, many reasoned, would cause oil prices to escalate further and generate new pressures on a world economy that is only now getting onto somewhat firmer ground.

Meanwhile, the gains this week, which had included triple-digit point advances for the Dow on Monday, Tuesday, and Wednesday, had helped that composite overcome the bulk of the losses it had sustained in August. In all, the Dow, notwithstanding a solid rise in Walt Disney (DIS - Free Disney Stock Report) stock on the announcement of a large share buyback, fell 26 points; the Standard and Poor's 500 Index shed a half dozen points; and the NASDAQ, which had bucked the aggregate uptrend in the market on Wednesday by falling four points, eased by another nine points yesterday. The small- and mid-cap indexes also lost ground, while the Big Board showed twice as many losers as gaining issues. The plurality of falling stocks to winning equities was about five-to-three on the NASDAQ.

With the situation in Syria no longer quite as prominent on the front burner as a week ago, and with the economic news once again sparse, save for the report yesterday morning of a decline in weekly jobless claims, Wall Street's thoughts returned to the Federal Reserve, which is scheduled to hold its next FOMC meeting this coming Tuesday and Wednesday, and to individual company news stories. Here, there was some disappointment on the retail front, with Men's Wearhouse (MW) falling short on its latest quarterly earnings and issuing disquieting guidance going forward. That stock sold off notably, losing more than 12% on the day. As to the Fed, the latest expectations are that the nation's central bank will use the coming FOMC meeting as a possible platform to suggest a slowdown in its popular bond-buying program.

As to other news, gold prices fell some $40 an ounce, an especially large reversal that led to some sharp declines in a number of gold stocks. For example, Newmont Mining (NEM), a major metals company, was a key participant in the selling, with that stock losing more than 4%. Newmont shares are now selling for just about half of what they were at their high for the past 52 weeks.  

Now, as we look to the day ahead, we find that economic reports of note are once again in the news, with data out just in the past few minutes showing a modestly larger uptick in producer prices in August than had been expected and a smaller-than-forecast rise in retail sales during that same month. Then in an hour from now, the University of Michigan will report on consumer sentiment for early September. A slight easing from August's high reading is the general expectation.

Overall, the economy is in somewhat better shape now than it was earlier in the year and, as such, we believe that the nation is better able to handle a tapering in bond buying if that is what the Fed decides on next week. We believe that the second-quarter GDP gain of 2.5% may well be matched in the coming periods, which would likely give the Fed some latitude in slowly and gingerly reining in its monetary stimulus.

Finally, a new day dawns and the markets overseas are mostly lower following the unprepossessing performance on Wall Street yesterday. However, on our shores, the futures are now pointing modestly to the plus side with less than an hour to go before the start of the final trading session of the week. Bond yields, too, are climbing a bit, with the 10-year Treasury note returning 2.91%.   

At the time of this article's writing, the author had positions in DIS.