After The Close - The major U.S. equity averages—emboldened by a Senate-crafted agreement that will, assuming the House goes along, enable the nation to avoid a U.S. default and reopen the government—moved forcefully higher today. By the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 index had added 205, 45, and 23 points, respectively. The small-cap Russell 2000 and the S&P Mid-Cap 400 Index rose by similar percentages in a productive day for the bulls. Overall, advancing issues led decliners by a notable margin on both the Big Board and the NASDAQ.

From a sector perspective, all of the 10 major groups finished comfortably in positive territory. Leadership came from the energy, consumer staples, financial, and healthcare stocks. The financial and healthcare issues seemed to benefit the most from the likely agreement to extend the deadlines for the fiscal negotiations. The financials were higher on relief that a catastrophic U.S. debt default would likely be avoided assuming the House passes the Senate-produced agreement tonight.  In the healthcare space, the managed healthcare companies stand to benefit the most from the government’s ability to move full steam ahead in its implementation of the terms of the Affordable Care Act. Therefore, it should not come as a surprise that shares of those companies jumped after the latest deal on Capitol Hill looked like yet another sign that the House Republicans-led charge to defund the new healthcare law would, in all likelihood, prove fruitless.

As has been the case for several weeks now, the direction of trading today was predominantly driven by the actions and tidings from Capitol Hill. Investor skittishness was quelled by the bipartisan Senate deal to end the government shutdown and extended the debt-ceiling limits. A failure to come to an agreement on the latter issues would have caused the U.S. to default on its debt obligations, which would have had serious global economic and financial consequences. Although the likely final outcome, which would be to extend the deadlines for reaching an agreement on a budget and the debt ceiling into 2014, would be only a temporary solution. Still, it would buy more time to let cooler heads prevail—if that is possible—and for a longer-term solution to be worked out.

With a temporary deal on Capitol Hill looking likely, investors should be able to turn their attention back to the economic and earnings beats. The third-quarter earnings season, still in its infancy, has made for a mixed reading so far, which had been the expectation going into the earnings season. On the positive side today were strong results from Mattel (MAT) and Bank of America (BAC)—and shares of both companies moved higher on the reports. Conversely, the stock of Stanley Black & Decker (SWK) fell sharply after the company lowered its profit forecast for the year. Investors also should that after the close of trading today, we will get the latest results from Dow-30 components American Express (AXP - Free American Express Stock Report) and International Business Machines (IBM).

Meantime, those starving for some news on the U.S. economy—the ongoing government shutdown has delayed some important government-produced reports, including data on the labor market and industrial production—received some today when the Federal Reserve released its latest Beige Book summation of economic conditions. On the whole, it was a selectively disappointing report, as it showed that a third of the nation was experiencing somewhat slower growth during September and early October. However, on the bright side, particularly when looking at the report from an equity market participant’s point of view, it probably means that the lead bank will continue its accommodative monetary policies for the time being, which has historically been viewed very favorably by those owning stocks. The yields on fixed-income securities also declined after the latest findings of the Federal Reserve were released. - William Fergusson

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


12:35 PM EDT - The U.S. stock market opened higher this morning, and has been able to build on these gains into the early afternoon.  It now seems likely that a deal will be reached in Washington, resulting in a temporary solution to the nation’s budget and debt-ceiling issues. It is critical that this agreement is fashioned before the October 17th deadline, as a failure in this regard could well result in credit downgrades, or negative qualifications, to the country’s debt standing. Specifically, one leading ratings agency already expressed concern over the political wrangling taking place. At past noon in New York, the Dow Jones Industrial Average is up 196 points; the broader S&P 500 Index is up 23 points; and the NASDAQ is higher by 43 points. Overall, the tone is highly favorable, as rising issues are sharply ahead of decliners. Investors are gravitating to some of the mid and small cap names, too, which is encouraging.

All of the market sectors are participating in today’s up move. The financial stocks are showing particular leadership, as traders are generally pleased with the earnings reports recently released by leading companies in the sector. The healthcare stocks are also advancing, helped by the biotechnology names. Meanwhile, the utilities are lagging, as they have been for some time.

Technically, today’s push higher, puts the S&P 500 Index past the 1,720 mark. In fact, if all goes well for the bulls, the index will soon be nearing its 52-week high at about 1,730, and this area could present some resistance. Meanwhile, the mood on Wall Street continues to shift, as the VIX, which ran up yesterday, is down 19%, to about 15.14, today. For traders, it is hard to judge just how the market will react, if or when a deal in Washington is announced. As many know, markets can often run up in advance of major news, and the large gains we have seen over the past few sessions may well have been anticipatory. Only time will tell. 

Although many reports were slated, due to the government shutdown there was just one economic report released this morning. Specifically, the National Association of Home Builders Housing Market Index came in with a reading of 55 for the month of October, a bit below expectations, and also shy of the September figure. Meanwhile, we are supposed to receive the Fed’s Beige Book summation for the month of October this afternoon and that will likely be examined closely.

Meanwhile, there was no shortage of corporate reports today for traders to digest. To wit, investors were largely pleased with reports from Mattel (MAT), Abbott Labs (ABT), and Bank of America (BAC). However, the reaction was less favorable to the news from Linear Technology (LLTC).  - Adam Rosner

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


10:30 AM EDT - The U.S. stock market is trading sharply higher this morning. Traders are now more optimistic that Congress can reach an agreement, and find at least a temporary solution to the nation’s budget and debt ceiling issues, before the October 17th deadline approaches. Traders also received a batch of encouraging earnings reports from a number of leading companies earlier this morning, and that is likely helping, too. At 10:00 AM (EDT) in New York, the Dow Jones Industrial Average is up 171 points; the broader S&P 500 Index is ahead 19 points; and the tech-heavy NASDAQ is adding on 41 points. There is widespread buying of equities, as advancers are outpacing decliners by a three-to-one ratio.  All the major market sectors are well into positive territory with the financials leading the way. - 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 – Earnings season is under way, and investors are digesting a number of reports this morning. Wall Street appears fairly pleased with financials from Internet company Yahoo! (YHOO), drugmaker Abbott Laboratories (ABT), beverage and snack giant PepsiCo (PEP), medical supplies company St. Jude (STJ), toy manufacturer Mattel (MAT), mortgage insurance provider MGIC Investment Corp. (MTG), and Bank of America (BAC), one of the nation’s largest banks. Indeed, all of these stocks are indicating higher openings this morning on earnings news. On the other hand, and investors took issue with third-quarter reports and outlooks from chipmaker and Dow-30 component Intel (INTCFree Intel Stock Report), tool maker Stanley Black & Decker (SWK), and W.W. Grainger (GWW), a provider of maintenance, repair, and safety equipment. These stocks are down ahead of the bell, with SWK showing the most weakness. – 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, which notwithstanding some earlier daily reversals, such as occurred during the first part of last week, has largely been in denial about the possibility of a catastrophic debt default should the two parties not come to an agreement on lifting the $16.7 trillion debt limit. And to an extent yesterday's moderate setback, which deepened as the day wore on, differed little from most prior reversals in the fact that there was no panic unloading of stocks by any stretch of the imagination.   

However, there is also no denying that the closer we get to the Administration's indicated deadline of October 17th for raising the debt ceiling without a deal, the less in denial investors might become. This is because that for now, at least, the assumption by most market participants is that the penalty for going past the indicated deadline is so severe that such an outcome would not take place. And, for the most part, such an assumption appears to be reasonable. After all, the comments out of the Senate from both parties have been rather reassuring. Indeed, the senior chamber is likely to fashion a last-minute deal today.

However, the Republican-controlled House continues to balk at securing an agreement with the Democratic-led Senate on a curative package that would allow a raising of the debt ceiling until February and a reopening the partially shuttered federal government until January. Indeed, when the disparate sides looked further from a deal as yesterday progressed, the market turned decisively lower in the afternoon, with the Dow Jones Industrial Average sinking 133 points and the tech-heavy NASDAQ giving back a more manageable 21 points. But the Standard and Poor's Mid-Cap 400 Index and the small-cap dominated Russell 2000 shed roughly a percent each, a more formidable decline on a proportionate basis. 

All told, there was a lot of skittishness late yesterday as investors worried about what might transpire after the equity market closed and overnight. It seemed logical based on such late action to conclude that unless the parameters of a deal were taking shape soon, Wall Street would open this morning to the downside. However, selling did not evolve in Asia overnight, as the major market indexes across the globe closed on a mixed note, while in Europe this morning, the leading bourses, albeit lower, are just incrementally so on average. Not surprisingly, therefore, the seemingly logical declines over here are not indicated, as the Standard and Poor's 500 Index futures are higher by nine points, while the NASDAQ futures are suggesting a somewhat larger opening advance.

Of course, a presumptive higher start, notwithstanding, how Wall Street closes may well be influenced heavily by the tone out of Washington. If calmer heads prevail and a deal can be worked out, which remains the consensus expectation, the market could well hold its gains and even add to them. Should there be a less-happy recap from Capitol Hill, a less-welcoming outcome would likely be the case.

Meantime, the earnings beat heats up with a couple of Dow stocks scheduled to issue their quarterly metrics after the stock market closes today, namely financial services and credit card behemoth American Express (AXPFree Amex Stock Report) and technology icon International Business Machines (IBMFree IBM Stock Report). Also, today, the Federal Reserve is due to release its Beige Book economic summation, which will be used heavily to help the central bank formulate monetary policy when its meets in two weeks. With the government partially shut and uncertainty the rule, there seems little likelihood the Fed will shift gears at that time.

But for now, the focus is on Washington, and that is likely to make for some potentially frenetic trading activity in the day ahead. 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.