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After the Close - The major U.S. equity indexes pushed higher today, but not all that decisively so. In all, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index finished modestly higher, while the small-cap Russell 2000 and the S&P Mid-Cap 400 Index did not fare as well, with these broader averages on average, ending the session near breakeven. Helping equities was some decent earnings news, particularly from a few prominent industry giants (more below). We also sense that today’s uneven market performance may have been the result of some investor fatigue after a few rollercoaster weeks and, perhaps, some hesitation on the part of traders to take any more sizable positions ahead of next week’s FOMC meeting.

The moderate gains to end the week capped a five-day stretch on Wall Street that saw both the bulls and the bears have their way at times. Still, all in all, it was another productive week for those who were long equities, as the Dow Jones Industrials, the NASDAQ, and the S&P 500 Index ended with respective weekly gains of 1.0%, 0.7%, and 0.9%. In fact, the S&P 500 set a few all-time highs, including today, along the way and the NASDAQ drew closer to the physiologically significant 4,000 mark.

From a sector perspective, investors seemed to favor the more defensive groups today, including the utilities and the telecommunications stocks. With market valuations rather frothy, investors, as noted, seem to be a slight bit hesitant about adding further risk to their portfolios. Too, the higher-yielding equity issues have become more attractive to income-oriented investors as yields on fixed-income securities continue to fall. In fact, the yield on the 10-year Treasury note ended the week at 2.50%; the benchmark rate had briefly topped 3.00% in early September.   

Meanwhile, the technology stocks—despite some support from the shares of Amazon.com (AMZN) and Microsoft (MSFT Free Microsoft Stock Report)—and the consumer discretionary equities finished in the red. The latter group was likely hurt by a weak reading on consumer sentiment. Specifically, the University of Michigan reported that consumer confidence hit a 10-month low in October, following the partial government shutdown. The consumer sentiment weakness offset a good report on durable goods orders. Before the market opened today, the Commerce Department reported that September orders for manufactured durable goods rose a healthy 3.7%, in line with expectations.

As noted, there was another bunch of earnings reports released in the last 24 hours. Amazon.com shares jumped after the world’s largest online retailer reported better-than-expected top-line results. The stock of software giant Microsoft rose after the company topped Wall Street’s earnings expectations by a considerable margin. And, United Parcel Service (UPS) stock was up modestly after the shipping giant posted in-line results, but was optimistic about the upcoming holiday shopping season. Conversely, the blue-chip stock of Procter & Gamble (PG Free P&G Stock Report) gave minimal ground after the consumer packaging giant reported in-line results. Looking ahead to next week, we will receive another heavy dose of earnings releases, headlined by the latest quarterly results from five more Dow-30 companies.

Speaking of next week, the investment community’s attention will be on what the Federal Reserve has to stay following the conclusion of its two-day monetary policy meeting on Wednesday. The prevailing sentiment is that the recent unimposing economic news—including this week’s report on the labor market and today’s reading on consumer sentiment—will keep the central bank’s $85 billion monthly bond-buying program in place. Usually, such accommodative policies are favorably viewed by investors and can push stocks higher over the short term. However, with valuations looking stretched, we don’t expect much of a pop from the forthcoming Federal Reserve news. Likewise, a deviation from the Federal Reserve’s current stance would likely raise the volatility in a market that is now overheated. The S&P 500 Volatility Index (or VIX) ended the week just-above 13, a level that would clearly suggests that the market is overbought. -  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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12:30 PM EDT - The U.S. stock market is trading selectively higher today, with several of the major averages in positive territory. At just past noon in New York, the Dow Jones Industrial Average is up 14 points; the S&P 500 Index is higher by two points; and the NASDAQ is also advancing two points. However, there is a mixed tone to the session, as declining issues are outnumbering of advancers by a narrow margin on both the NYSE and the NASDAQ. The major market sectors are divided. There are strong advances in the technology names and the consumer issues are making strides. Also, the high-yielding utility stocks are holding up well. In contrast, there is weakness in the basic materials equities, and some of the telecom stocks are also weighing down the market.

Technically, the S&P 500 Index is at high ground and continues to gain support. Notably, we will soon be entering the holiday season, and often markets perform well into the close of the year. While this would suggest some optimism, the market certainty seems to be a bit overbought by some indications, and price-to-earnings multiples appear stretched.

There were a couple of economic reports released this morning. Durable goods orders for September rose 3.7%, which was an improvement over the August showing, and in line with analyst estimates. Also the University of Michigan’s Consumer Sentiment Survey provided a final figure of 73.2 for October, which was a bit lower than many analysts had anticipated.

Meanwhile, the corporate reports continue to shuffle in. The results have been decent, for the most part, and this has been boosting sentiment. We recently heard from Microsoft (MSFT Free Microsoft Stock Report). Traders were happy with that company’s results and the stock is up sharply. We also received a good set of numbers from Internet retailer Amazon (AMZN) and that issue is leading the technology issues. Among the other large names, United Parcel Service (UPS) shares are rising slightly after a good report, while Procter & Gamble (PG Free P&G Stock Report) stock is a bit lower even though the consumer products giant matched expectations. - 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 SurveyIt’s called earnings season, but that’s not always what investors care about. Case in point is online retailer Amazon.com (AMZN), which reported another quarterly loss in the September interim, but delivered better-than-expected revenues, causing investors to bid the stock sharply higher in the premarket. Wall Street also cheered quarterly financials from software giant Microsoft (MSFTFree Microsoft Stock Report), which were helped by strong sales to businesses. MSFT shares are trading notably higher ahead of the bell as a result. Other stocks indicating higher openings this morning on earnings news include package delivery company United Parcel Service (UPS), online game developer Zynga (ZNGA), consumer goods manufacturer Newell Rubbermaid (NWL), paint producer and retailer Sherwin-Williams (SHW), Coinstar and Redbox parent Outerwall (OUTR), and shoe company Deckers Outdoor (DECK), with DECK, ZNGA, and OUTR showing the most strength. 

On the other hand, investors appeared to take issue with earnings reports from household products heavyweight Procter & Gamble (PGFree Procter & Gamble Stock Report), pharmacy benefits manager Express Scripts (ESRX), and networking products developer NETGEAR (NTGR). – 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 - We are back to some sense of normalcy on Wall Street these days. And that tends to often be good news for stocks, just as unusual, or surprise, developments often tend to have a negative effect on traders' psyches. Of note here, is the earlier partial government shutdown, and the harsh debt-ceiling debate that accompanied it. Those happenings had, for a time, caused a rise of anxiety levels on the Street. Now, that these events have been shelved on at least a temporary basis, and thoughts have returned to the economy, the Federal Reserve, and earnings, the mood of investors has brightened. Hence, we have had a run of higher highs in the market, including a succession of record closes on the Standard and Poor's 500 Index. 

Meanwhile, the news on each of these non-government fronts remains favorable. First, the U.S. economy is expanding sufficiently to keep talk of a possible recession at bay. Recent metrics on job growth and sales of existing homes, albeit not particularly compelling, have been decent enough to ensure that the gross domestic product will increase in the current quarter, if at an uninspiring pace. For now, we look for GDP growth of 1.5%-2.0% in the current three-month stretch.

Moreover, that growth is clearly subdued enough to likely keep the Federal Reserve, which holds its next FOMC meeting next week, from any tapering of its present bond-buying program and to hold interest rates at current, historically low levels for some time yet. Then, there is earnings. Now, these metrics haven't been all that appealing, either, especially given that comparisons are often against lowered profit targets. Still, most companies are outperforming expectations, if only incrementally, and that is proving to be enough to keep even normally skittish equity investors adequately pleased to sustain the current buying frame of mind.

So, when we add it all up, it is not all that surprising that the bulls keep running up the score. Having said that, we note that P/E's are getting ever-more stretched, as they are well above 18 at this time for the stock market at large, while the median dividend yield is barely 2%. Under this scenario, it would seem that the market is priced for near perfection and certainly not valued for the longer term. Still, fundamentals are sufficiently strong, we think, to likely preclude a notable market correction in the current setting. But, of course, environments rarely stay static and there is every reason to expect a change in the investment backdrop at some point. That is the very nature of the stock market, especially in the current fast-paced global setting, where news typically travels at breakneck speed. It was J.P. Morgan who a century ago when queried about what the stock market will do said prophetically that "it will fluctuate." In the meantime, 

In the latest session, stocks, buoyed by generally constructive earnings, overcame the prior day's half-hearted selling to start and end the day strongly, with the Dow Jones Industrial Average making a near-triple-digit gain, after having been up more than 115 points earlier in the day. Moreover, the Standard and Poor's 500 Index approached yet another all-time high, falling a bit short, but holding above the key 1,750 support level. That should prove pleasing to technicians. Also, the NASDAQ moved ever-closer to the 4,000 mark, a level not seen since the dot.com bubble days of 2000.  

What's more, yesterday's strong showing and a generally better performance in Europe this morning are making apparent believers out of even the more cautious market players on Wall Street, as the equity futures are now pointing to a further uptick when trading commences on our shores in less than an hour from now.

Finally, on the profit front, giant software maker and Dow component Microsoft (MSFT - Free Microsoft Stock Report) reported some reassuring results after the closing bell had sounded on Wall Street yesterday. And, in response to these better bottom-line metrics, the stock is indicating a strongly higher opening this morning. Also likely heading higher at the open this morning are the shares of online retailer Amazon (AMZN). That stock figures to gap higher on better revenues. Both of these issues should help the NASDAQ, where the futures are suggesting a nicely higher opening in less than an hour from now. Other tech names should benefit as well.   - Harvey S. Katz

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