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After The Close - The major U.S. equity indexes, like yesterday, traded in a narrow range around the neutral line for much of today’s session. However, contrary to yesterday, it was the bears who had the upper hand for much of the day, as declining issues led advancers by a decent margin on both the New York Stock Exchange and the NASDAQ. Unlike last Friday, following the release of employment data, we have not seen any major moves in either direction this week. Perhaps some hesitation on the part of traders to take a significant position ahead of next week’s two-day Federal Open Market Committee (FOMC) meeting is in play now. There also has not been much in the way of notable earnings or economic news to push equities markedly in either direction.

By the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index were all off modestly. However, it should be noted that the loss for small-cap Russell 2000 was much more pronounced, maybe an indication that investors are becoming a bit more skittish in an overbought market ahead of the aforementioned Federal Reserve monetary policy meeting. All in all, investors seem to be weighing some improving economic data versus the possibility that the lead bank may soon begin to taper its bond-buying purchases. The aggressive asset purchases, which have flushed the markets with cash in recent years, have had a big hand in the four-plus year bull run.

From a sector perspective, most of the 10 major groups were in the red today. The biggest laggards were the higher-yielding consumer staples and utilities issues. There is growing sentiment that if the Federal Reserve cuts back on its bond buying in the months ahead, it will push yields on fixed-income instruments higher and, thus, reduce the appeal of higher-yielding stocks to the income-oriented investors. Meantime, there was mild buying interest in the basic materials and technology sectors. Within the technology space, shares of the social media companies performed well today, including Twitter (TWTR), which rose on some encouraging ad-targeting news. 

The financial issues were also active today, which should come as no surprise after reports broke that federal regulators had approved the 900-page Volcker rule, which was designed under the Dodd-Frank regulation to help limit the possibility another financial meltdown. The rule, which doesn’t go into effect until July, 2015, is designed to rein in Wall Street and prevent the big banks from making risky bets. The financial stocks turned in a mixed performance following the announcement. Shares of Goldman Sachs (GS) and Morgan Stanley (MS)—two companies that have already implemented some of the core principles of the rule on their own—moved higher in the latest session. Conversely the stocks of Wells Fargo (WFC), Bank of America (BAC), and Citigroup (C) were modestly lower.  

Looking ahead to tomorrow, it will be another light day with regards to earnings and economic news. Given that backdrop, we would not be overly surprised if the market averages continued to trade in a narrow band around the neutral line. Later on this week, investors will get data on retail sales (Thursday) and producer (wholesale) prices (Friday). These two reports, particularly the former, will be closely examined to get a better gauge as to how the holiday shopping season is going. The November report includes sales data from the much ballyhooed Black Friday weekend. -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 EST - The U.S. stock market opened lower this morning, and despite a small bounce early in the session, seems unable to reverse course. As we pass the noon hour in New York, the Dow Jones Industrial Average is off 36 points; the broader S&P 500 Index is down five points; and the technology-heavy NASDAQ is now off nine points. Market breadth suggests a weak showing, as declining issues are outnumbering advancers on the NYSE. Most of the market sectors are in negative territory, too. There are losses in the consumer cyclical names. Also, the high-yielding utilities are quite weak. However, some relative strength can be found in the basic materials and industrial issues.

Technically, the market has been consolidating after last Friday’s sharp move up. That advance took place after the November employment report came out ahead of expectations, but not dramatically so. It was encouraging to see traders finally reacting favorably to the improved economic figures, rather than fearing possible maneuvers by the Fed. Meanwhile, the bulls will have to extend that move in order to push the averages higher, and so far that has not materialized. Trading volumes also have been light lately and that suggests a tentative tone. Meanwhile, the VIX, which is still at very low levels, is headed a bit higher today, and that may also imply that traders are apprehensive.

Meantime, there were a few economic releases issued this morning. Notably, wholesale inventories increased 1.4% in October, which was quite a bit higher than expected. If inventories build up too much, it may suggest that sales are not keeping pace, and that could be of some concern.
Tomorrow will be a quiet day for reports, too. However, weekly crude oil inventories are due out. Things pick up on Thursday, as we get a look at the weekly jobless claims, November retail sales, and October business inventories. Next week will be a bit more interesting, as there is an FOMC meeting and interest rate decision taking place, and that can provide a catalyst to move the markets, one way or the other.

In the corporate arena, there were a few reports out today. In the housing area, Toll Brothers (TOL) stock was up earlier as investors were encouraged by that company’s results. However, the stock has since pulled back. Elsewhere, AutoZone (AZO) stock is higher too, on a favorable release. 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 SurveyInvestors are digesting some earnings news this morning. Wall Street appeared fairly pleased with quarterly results from homebuilder Toll Brothers (TOL), and that stock is trading slightly higher ahead of the bell. Updated guidance from drugmaker Teva Pharmaceuticals (TEVA) and flooring retailer Lumber Liquidators (LL) has caused those stocks to move up slightly, as well. The news was not as encouraging elsewhere, however, and shares of automotive parts retailers AutoZone (AZO) and Pep Boys (PBY) are moving lower in pre-market trading on earnings news, with PBY showing considerable weakness. Elsewhere, the stock of lululemon athletica (LULU) is indicating a slightly higher opening this morning, after the athletic apparel retailer announced that it has found a new CEO to replace outgoing Christine Day and that founder Dennis ‘Chip’ Wilson is stepping down as Chairman. – 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 edged a bit higher yesterday, as it failed to materially building on Friday's dramatic gains, but nonetheless also managed to retain those stellar aforementioned gains inked late last week.

In all, after a strong opening and some backing and filling thereafter, the Dow Jones Industrial Average gained five points; the NASDAQ headed higher by a half dozen points; and the Standard and Poor's 500 Index rose by three points, but did manage to ink another record high in the process. The market, in fact, never really sold off, managing to largely retain its gains throughout the session. Leading the way into the plus column were the materials stocks and the financials.

Once again, the main area of focus was the Federal Reserve. That is logical, as earnings season for the third quarter is long over and we are still a month, or so, away from the start of the fourth-quarter reporting period. Also, this will be a relatively light week for economic data following last week's busy five-day stretch, which culminated in the report of just over 200,000 new jobs being created in November. That not too hot, not too cold data helped the equity market to post a booming 199-point surge in the Dow. The consensus is that this decent, but by no means, exceptional, report on the economy will not push the Fed to adopt a revised monetary policy any earlier than it would have been before. The guessing is still that it will shift gears either later this month or early in 2014.

Most pundits, as noted, still believe that the central bank will opt to start tapering its bond-buying sooner rather than later. Now, a number of traders also contend that such a tapering will not do too much to dampen the long-running enthusiasm for stocks. The thinking is that any move will be very modest, at first, with the program staying at least partly in effect until late next year or even 2015.

Also helping sentiment is some evolving optimism that we might soon get at least an interim budget deal in fractious Washington. Indeed, there is some speculation that such an agreement could come before the end of this week, thereby enabling the government to avoid another market wrenching partial shutdown as we saw in early October.

As to other markets, the yield on the 10-year Treasury note, which has a direct bearing on mortgage rates, is now starting to ease back again, falling this morning to 2.82%. Last week, the yield had been above 2.90%. Also, the yield on the 30-year Treasury bond, which had climbed to about 3.95% last week, is now back down to 3.84% this morning. Meantime, oil is rising again, while gold, which had fallen to about $1,200 an ounce a bit earlier, is now knocking on the door of $1,250. The pickup in gold would explain yesterday's strength in the materials and metals stocks.

Now, a new day dawns, and once again news is light on the economic front, as it will be tomorrow, as well. That will change on Thursday when the government will issue data on weekly jobless claims and monthly retail spending. As for the markets, they were mixed overnight in Asia and little changed so far today in Europe. Over here, though, after starting the day somewhat higher, the futures have turned negative, with the S&P 500 Index futures now off by almost five points and the NASDAQ futures lower by eight points. Could we have the Monday-Tuesday reversal? It is way too early to say on that score, but the earlier signs at least point in that direction.        

Finally, our thinking is that the market will find some resistance at these levels over the next few sessions, with investors a bit gun shy about making big bets ahead of next week's critical Federal Reserve  meeting.   – Harvey S. Katz

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