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After The Close - The U.S. stock market opened sharply higher this morning and managed to build dramatically on those gains in the late afternoon. Traders were likely relieved by reports that the situation in Washington may be improving. Politicians now seem willing to temporarily extend the debt ceiling, while debating the budget. However, the government may still remain shut down, at least partially. While no concrete deal has been announced, these developments show some progress. At the close of the session, the major averages closed up better than 2%. The Dow Jones Industrial Average finished up 323 points; the broader S&P 500 Index was higher by 36 points; and the technology-heavy NASDAQ, which reasserted its leadership role, tacked on 83 points. Market breadth showed widespread buying of equities, as advancing issues outnumbered decliners by about six to one on the NYSE.

Further, all of the various market sectors participated in today’s move higher, with notably large gains in the financial stocks. The basic materials and industrial issues also rose sharply. There was no weakness in the market today, as even the utilities, which underperformed relative to other groups, logged a roughly 1.5% advance.

Technically, today’s trading pushed the S&P 500 Index back well above its 50-day moving average, located at about 1,679. The large move has undone much of the damage wrought over the past few sessions. Now, it remains to be seen if the bulls can follow through over the next several days. The sentiment improved dramatically today, too, as the VIX dropped about 16%, to 16.44.

Meanwhile, traders received some economic news this morning. Specifically, initial jobless claims for the week ended Oct. 5th rose to 374,000, which was higher than the prior week’s unrevised figure, and above analyst expectations. However, the recent numbers may be misleading, as some of the increase resulted from computer-related problems and the impact of the government shutdown.

In corporate news, shares of Citrix Systems (CTXS) lost considerable ground, after the technology company issued disappointing quarterly guidance. Also, Ruby Tuesday (RT) stock fell, after the restaurant operator issued weaker-than-anticipated quarterly results. Meanwhile, we will receive some important earnings releases tomorrow, as J.P. Morgan Chase (JPM - Free J.P. Morgan Stock Report) and Wells Fargo (WFC) are slated to release their quarterly numbers. - 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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12:25 PM EDT - Stocks are sharply higher today on word that a short-term hike in the nation’s debt ceiling may be at hand. Right around the noon hour on the East Coast, the Dow Jones Industrial Average is up 231 points and the NASDAQ is in the plus column by 68 points. Market breadth is extremely positively, with the number of advancing issues outpacing decliners by a wide margin on the Big Board.

Investors around the globe have been increasingly worried that the United States was coming perilously close to a self-induced cash crunch that would have seen bills paid according to their priority. The deadline for the nation to reach its borrowing capacity is a week away, on October 17th.

After being urged by leaders from around the world not to create a scenario that could prove highly disruptive to the ever-more interconnected global financial system, the powers that be in Washington appear set to buy some time—a six-week window-- to negotiate their budget differences. The partial government shutdown would remain in place, though.  

For its part, the government shutdown is starting to be felt in the broader economy. Reports suggested that workers laid off by government contractors were included in this week’s rise in initial unemployment filings. But although that figure jumped by 66,000, to 374,000, the main reason appears to be because of underreporting in recent weeks, as California upgraded its computer system.

Moreover, the housing market is feeling the effects of the government closing its doors. There are indications of delays in processing mortgage applications by the Federal Housing Administration and other lenders, and lending in rural areas by the Department of Agriculture has reportedly ceased, as have Small Business Administration loans. Clearly, there is more work to be done in the Capitol to reestablish smooth-running operations.

Even so, mortgage money continues to be highly affordable, with the rate on the average 30-year home loan at 4.23% this week, according to government agency Freddie Mac, although that is up from 3.39% a year earlier.

At the sector level, all ten major segments of the market are trading higher, with financial stocks, such as Bank of America (BAC) and Citigroup (C) leading the way. Right behind are shares of consumer cyclical and industrial companies.

Heading into the afternoon session, stocks are near their highs for the day, as Washington is trying to create some breathing room itself, and apparently on hopes the government shutdown will end soon. -Robert Mitkowski

At the time this article was written, the author did not have a position in any of the companies mentioned.

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10:15 AM EDT - The bull is back! Well, at least in the early going on Wall Street, as the buyers, who have been largely out of the equity market over the past several weeks, have come storming back so far today, on hopes that the makings of at least a short-term deal to break the debt-ceiling standoff in Washington may yet evolve in the wake of expected meetings between the White House and Congressional Republicans.

Of course, there is a big difference between holding a meeting and actually getting a deal done. But it is at least a start. Here is what is going on. According to aides to the Republican leadership, The House of Representatives is considering agreeing to a short-term (perhaps six weeks) increase in the government's borrowing authority, thereby keeping a possible default after October 17th at bay and buying time for a more comprehensive agreement to take hold.

However, as small a step as this might turn out to be--as a longer-term agreement will undoubtedly be hard to come by--even this step is enough to bring back the bulls. So, just minutes after the opening bell had sounded on Wall Street, the Dow Jones Industrial Average was up 182 points; the NASDAQ was better by 58 points; and the smaller-cap indexes were soaring as well.      

Moreover, gaining stocks are now leading declining issues on the Big Board by almost ten to one, while advancers are overwhelming losers on the NASDAQ by some seven to one. Conversely, bonds are sinking in price, with the yield on the 10-year Treasury note, which moves counter to the price, up to 2.71%, while the return on the companion 30-year Treasury bond is up to 3.78%.   - Harvey S. Katz

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 SurveyThere is some earnings news out today, and the biggest disappointment appeared to come from Ruby Tuesday (RT). Indeed, that stock is plunging ahead of the bell in a notably stronger market, after the restaurant operator reported August-period results that were worse than expected. The stock of Citrix Systems (CTXS) is also down sharply in pre-market trading, after the developer and marketer of infrastructure access software cut its third-quarter guidance. Retailers are likely to be in the spotlight today, as well, since a number companies, such as Zumiez (ZUMZ) and L Brands (LTD), have released same-store sales figures for the month of September. Finally, shares of PVR Partners L.P. (PVR) are indicating a sharply higher opening this morning, after the coal and natural gas company agreed to be acquired by Regency Energy Partners for roughly $5.6 billion, including the assumption of debt. – Matthew E. Spencer

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 stock market moved up, down, in, and around yesterday before closing the midweek session in irregular fashion, but with a slight bias to the downside. The frenetic trading pattern had seen equities start out to the upside, buoyed, seemingly, by optimism that an acknowledged monetary dove, Janet Yellen, would be nominated by President Obama to succeed outgoing Federal Reserve Chairman Ben S. Bernanke. The market then faltered later on in the morning, with the Dow Jones Industrial Average losing close to 60 points at its nadir. Things then improved notably in mid-afternoon, with the aforementioned Dow gaining some 75 points at its peak, for a 135-point trough-to-peak turnaround. Those gains slipped away toward the close, however, with stocks ending the session on a somewhat sloppy note, with the Dow gaining 26 points, but with the NASDAQ, hurt by weakness in technology, falling back to a closing loss of 17 points. The small- and- mid-cap indexes also closed lower. It was hardly a confidence-building session.  

What caused this brief resumption of an uptrend? Perhaps, it was bargain hunting following a succession of down days over the past fortnight--including nearly 300 points in losses on the Dow Jones Industrial Average during the first two sessions of the week--that helped the bulls. On the other hand, it may have been relief that Janet Yellen, the presumptive favorite for the Fed nomination in recent weeks, actually received President Obama's nod. More likely, though, it was the release of the Fed's minutes to its last FOMC meeting, and the accompanying indication that the lead bank was unlikely to be all that quick to slow down its asset purchases, that slightly mollified the bulls. This latter point is being driven home even more definitively by the ongoing government shutdown, which will clearly hurt fourth-quarter GDP growth. What it was not, apparently, was any sign that major progress had yet been made in ending the government stalemate, or in reaching an agreement to raise the contentious debt ceiling. Failure on this latter count could lead to this nation's first default ever.

Whatever the reason, the stock market, as noted, closed on a mixed-to-lower note. Still, while this was hardly a stellar showing, the latest session did at least stop the widespread bleeding that had taken place over the course of the past two days and for much of the most recent two weeks. Now, we shall see if this incremental improvement can be sustained in the absence of definitively better news out of Washington.

The big problem for the market, as noted, is the impasse in the Capitol. Indeed, on a day in which a noted monetary dove had been nominated to head the Federal Reserve, and the minutes to that body's last Open Market Committee meeting suggested that a loose monetary policy likely would be maintained for some time, the market would normally have headed strongly higher. However, the contentious back-and-forth in Washington just proved too much to embolden the bulls yesterday. Our sense is that so long as the state of affairs in Washington remains as it is, the market likely will have trouble mounting a major advance. As we get closer to the October 17th deadline for raising the debt ceiling, and if no progress is made, the level of skittishness might well increase sending stock prices still lower.   

Another potential fly in the ointment is the pending flood of third-quarter earnings releases. To date, the early reports paint a mixed picture, with a few companies exceeding forecasts, while others miss even their lowered targets. We will get a clearer picture on the earnings front over the next week, or so, when a number of high-profile industrial and financial companies will release their latest quarterly results.

Now, a new day dawns, and, surprisingly, there seems a ray of optimism on the Washington front, as conservatives in Congress are showing signs of warming to the idea of a short-term hike in the country's borrowing limit--a sort of kick the can down the road approach. Also, House GOP leaders are preparing for their first meeting with the President since the government shutdown began.

Whether this is a winning strategy, and what strings will be attached to the debt-ceiling extension on both sides is not clear at this time. What is clear, however, is the upbeat mood in the financial markets, where stocks are gaining globally, and the S&P 500 Index and the NASDAQ futures are up by 14 points and 31 points, respectively with less than an hour to go before the start of the trading day on Wall Street. So, there may be a sliver of hope on the government front, after all. Stay tuned. – Harvey S. Katz

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