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After The Close - Most of the equity indexes finished the session in the red (see below), but there was more to the story today than the final numbers would suggest. For starters, the proverbial term “buy on the dip” could be used to describe a portion of today’s first-half trading action. The market averages fell sharply at the onset of trading, with commentary from the European Commission that Europe’s economic recovery will continue at a subdued pace weighing on the equity markets both here and on the Continent, but as trading progressed, the major U.S. indexes began to pare their losses, helped, in some part, by a better-than-expected reading on non-manufacturing activity—though the services data are typically not viewed as a game changer for equity market participants. However, in the end, the bears, who at no point today gave control of trading back to the bulls, were able to overcome the attempts made by the latter group to turn the tide of trading.

When all was said and done, the Dow Jones Industrial Average and the broader S&P 500 Index were not far removed from the neutral line in the red, while the NASDAQ was able to manage a small gain, helped by some selective strength in the technology space. However, there was still a negative undertone to trading, as market breadth was skewed to the downside on both the Big Board and the NASDAQ—though the spread narrowed quite a bit on the latter exchange.  A reversal in the small- and mid-cap markets, which witnessed outsized gains yesterday, was the primary culprit behind today’s market weakness.

From a sector perspective, it was mostly a sea of red ink among the 10 major groups, but like the broader market, the losses were pared quite a bit by the final bell. The day’s biggest laggards were the basic materials and energy stocks, which is not all that surprising given that investors were a bit unnerved by the aforementioned report that Europe’s economic recovery will be a bit slower than some investors may have liked to see. Within the materials, some of yesterday’s good performers, particularly the precious metals issues, were under pressure during today’s session. On the other hand, there was some mild buying interest in the consumer staples and discretionary sectors.

As noted, the day’s big economic news, at least stateside, was a very good report on nonmanufacturing activity from the Institute for Supply Management, a Tempe, Arizona-based trade group. The report showed that the nonmanufacturing sector expanded for the 46th consecutive month. Specifically, that gauge of activity in the services sector showed a jump to a reading of 55.4 in October, besting both the September increase of 54.4 and the 54.0 expectation. This data, along with a strong companion report on the manufacturing sector last Friday, are more signs that the economy continues to press forward, even if at a measured pace these days. Later this week, we will get the much-anticipated latest snapshots on GDP growth and the labor market.

Meantime, the earnings reports continued to flow in today, but as we have noted here in recent days, there doesn’t to appear many attention-grabbing report on display. On the positive side, were the latest reports from CVS Caremark (CVS) and Michael Kors (KORS). Those two reports and the subsequent stock actions also gave a good deal of support to the aforementioned intra-day performance of the consumer staples and discretionary sectors. Conversely, the stocks of rental car company Hertz Global Holdings (HTZ), fertilizer producer The Mosaic Company (MOS), and educational children’s products maker LeapFrog Enterprises (LF) were lower after their latest quarterly results were released. Investors should note that before the U.S. equity market opens tomorrow morning, more than 150 quarterly earnings reports will be released, including the latest results from Humana (HUM), Polo Ralph Lauren (RL), and Time Warner (TWX). - 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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12:15 PM EDT - The U.S. stock market is trading lower today, but the major averages have come well off the session lows. At past noon in New York, the Dow Jones Industrial Average is down 17 points; the broader S&P 500 Index is off three points; and the NASDAQ is lower by one point. Market breadth shows some underlying weakness to today’s session, as declining stocks are outnumbering advancers by about two to one on NYSE. Most of the market sectors are still in negative territory, with particular weakness in the basic materials issues. The financial stocks are also declining. In contrast, the high-yielding utilities are advancing, as these defensive issues tend to become popular when the equity markets begin to look a bit risky.

Technically, the S&P 500 Index continues to move in a sideways range, as traders digest recent gains. Sentiment has probably not changed too much, as the VIX is just slightly higher to just over 13 today. The rally will likely continue, as long as the bulls support the market on weakness. Also, we are about to enter the holiday season, which has often been a favorable time for stocks.

As was the case yesterday, the overseas markets set the tone for traders here in the United States. Notably, in Asia, the markets were mixed, as China’s Premier issued some cautious statements. Also, the bourses mostly closed off in Europe, on concerns about the pace of the economic recovery on the Continent.

Meanwhile, there was just one economic report released in the U.S. this morning. Specifically, the Institute for Supply Management’s Non-manufacturing Index came in with a reading of 55.4 for the month of October, which was a bit better than had been expected and slightly ahead of the 54.4 figure reported in September. Tomorrow, the Conference Board is set to release its leading economic indicators report for September.  

Elsewhere, the third-quarter earnings season is not fully over, as some companies are still releasing results. Among the popular names, CVS Caremark (CVS) stock is up, after the drug store operator posted healthy results. Also, Michael Kors (KORS), which staged a big run this year, put out a good report and that stock is trading higher. Meanwhile, Mosaic (MOS) released a somewhat weak issuance, and that widely-held stock is off a bit.   - 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 SurveyWe are still in the midst of earnings season, although the pace of reports has slowed decidedly, especially in the large-cap arena. One of today’s biggest winners appears to be GT Advanced Technologies (GTAT). Indeed, shares of the manufacturer of modules used to make solar panels and a producer of plastics (sapphire) used in the LED market are surging ahead of the bell, after the company reported third-quarter results and announced that it has entered into a supply contract with Apple (AAPL) to provide the computer maker with sapphire material. Other stocks moving higher on earnings news include Internet company AOL Inc. (AOL), drugstore operator CVS Caremark (CVS), apparel company Michael Kors (KORS), and satellite television provider DIRECTV (DTV). Conversely, shares of car rental company Hertz Global Holdings (HTZ), fertilizer producer The Mosaic Company (MOS), and LeapFrog Enterprises (LF), a developer and marketer of technology-based educational products, are all moving lower in pre-market trading on earnings news, with LF stock 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 - Yesterday's uneven stock market performance, while clearly uninspiring in the aggregate, was still interesting for intense Wall Street watchers in that the while the leading averages moved little on the day, the small- and mid-cap indexes showed strong underlying strength, in a reversal of form from last week when the gains were much more narrowly configured and evolved mostly on the larger-cap end.

Of note, the Standard and Poor's Mid-Cap Index jumped by nine points, while the small-cap Russell 2000, which had eased a bit this past Friday, while the Dow Jones Industrial Average was adding 70 points, gained 11 points on the day, or about 1%. On the other hand, the Dow, the Standard and Poor's 500 Index, and the tech-laden NASDAQ gained just modestly, on a percentage basis, with much of that incremental strength coming in the final minutes of trading on a seesaw day that saw those indexes never depart too far from a neutral reading. Interestingly, the advance-decline ratio, a problem for the bulls at times last week, firmed up notably yesterday, with winning stocks beating out losing issues on the Big Board and the NASDAQ on the order of about two to one. Thus, it was a broad, if not major, rally.

Overall, there was little afoot yesterday but some plain old-fashioned group rotation. To wit, the basic materials issues, a notable laggard for much of the year, continued their multi-session recovery, with the precious and diversified metals, the steels and the aluminums all participating in varying degrees. However, there were some laggards in the tech area; though the drugs were fairly strong, as they have been for a number of sessions now.

This group rotation occurred on a day in which the economic and profit news was comparatively light following a number of sessions in which both areas of interest seemed to be on the front burner. Looking ahead on these fronts, the business beat will prick up over the course of the week, staring today with the Institute for Supply Management's monthly metric on non-manufacturing activity set for release at 10:00 (EST). A slightly lesser rate of expansion is the consensus forecast there. Other noteworthy scheduled releases this week include data on the leading indicators, initial and continuing jobless claims, the first look at third-quarter gross domestic product, and Friday's releases on job growth, the jobless rate, personal income, consumer spending, and a consumer sentiment survey from the University of Michigan.

Meanwhile, whatever the ebb and flow of the daily stock market movement, the reality is that we are in an almost unprecedented bull market, with any dips being almost immediately countered by bargain hunting, if one can call it that given the frothy valuations at present. Nevertheless, there is really no impetus to do any serious selling, and the immediate future would not seem about to change things.

That said, the market overseas were weaker today as reports showed that Europe's economy was weakening somewhat following some earlier tentative steps along the recovery road. The latest tentative growth figures, meanwhile, and the weaker showing by the bourses on the Continent thus far this morning are combining to pressure our futures, although the presumptive initial setback in our markets look less material than was the case several hours ago. – Harvey S. Katz

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