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After The Close - Stocks attempted a comeback this afternoon following considerable weakness in the morning session, but the rally sputtered toward the close. At the end of the day, the large-cap Dow Jones Industrial Average was off 104 points, although the NASDAQ was off only five points. The broader market mirrored the price action exhibited by those major averages, with decliners outpacing advancing issues on the New York Stock Exchange. Still, small and mid-cap stocks, transportation stocks, and utilities closed slightly higher, suggesting the bearishness wasn’t whole-hearted.

The volatility arose partly from a favorable report on retail sales, which increased the most in five months in November. Retailers had a rather difficult situation to deal with when this year’s Thanksgiving came on the last possible day it could on the calendar, shortening the holiday selling season by six days versus last year. That may be one reason a number of stores experimented with opening on Thanksgiving night.

The effect of the solid retail sales report was to reignite fears about the Federal Reserve tapering its monetary stimulus. Wall Street can be fickle at times, and this appeared to be one instance, since stocks rallied strongly last Friday after an upbeat jobs report that, in the recent past, might have prompted similar fears of a less accommodative Fed. But this morning’s selling could also have stemmed from investors’ urge to take profits after a terrific rally this year.

Meantime, a jump in initial unemployment claims was given less weight, apparently on the thinking that the numbers may have been distorted because of the holiday.

Stocks in the news included the IPO of Hilton Worldwide Holdings (HLT), which enjoyed a favorable reception. Shares of the storied hotel chain were the most actively traded on the Big Board.

On the downside, the shares of apparel designer and retailer lululemon athletica (LULU) fell sharply after the company said it expected same-store sales to be flat in the fourth quarter. 

On the whole, investors could be in for more push-pull price action ahead of next week’s Federal Reserve two-day meeting commencing on Tuesday. Although the shift to a market driven by prospects for earnings and economic growth has begun, there are lingering concerns over how stocks will trade once the central bank does, in fact, begin to reduce support for the economy. -Robert Mitkowski

At the time of this 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 is putting in another weak performance today, following yesterday’s broad selloff. As we pass the noon hour in New York, the Dow Jones Industrial Average is off 109 points; the broader S&P 500 Index is down seven points; and the technology-heavy NASDAQ, which had earlier struggled to hold onto a small gain, is now in negative territory. Market breadth indicates a soft session, too, as declining issues are outnumbering advancers on the NYSE. Today there are almost 225 stocks at new lows, versus only about 25 at new highs on the NYSE, and that suggests the situation is weak there. The figures look a bit more favorable on the NASDAQ. As was the case yesterday, weakness can be found throughout almost all of the market sectors. There are sharp losses in the consumer non-cyclical names, and the basic materials issues are off. Meanwhile, the energy sector is down just slightly, which suggests some relative strength. Also, the utilities are advancing, possibly as investors are becoming a bit less risk averse.

Technically, while the S&P 500 received a big one-day boost from last Friday’s employment report, investors ultimately decided to sell after that move, putting the index back below 1,800. The S&P 500 may find support at the current level, or move lower to test its 50-day moving average located at 1,760, which is just 1% below today’s reading. The 1,760 area, too, functioned as a point of congestion in late October and early November, so it may be a figure to watch. The VIX, now at roughly 15.65, is again trading higher today. Meanwhile…

Traders received some notable economic news this morning. The employment situation was back in the spotlight, as the initial jobless claims for the week ended December 7th, rose to 368,000. This was well ahead of the prevailing expectations, as well as higher than the prior week’s reading of just 300,000.  Weekly continuing claims moved higher, too. While this week’s report was a bit discouraging, it does not seem that traders are willing to bet that the Fed will now refrain from taking tapering action. Meanwhile, retail sales for November held up well, increasing 0.7%, which was in line with analyst forecasts.

Finally, in the corporate area, Lululemon Athletica (LULU) stock is off sharply, after the maker of yoga apparel announced decent quarterly results, but issued disappointing guidance. Also, Ciena (CIEN) shares are slipping, after the telecom company released weaker-than-expected figures. 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 SurveyEarnings reports continue to trickle in. One of this morning’s biggest disappointments came from athletic apparel and accessories retailer lululemon athletica (LULU). The company’s October-period results were a bit better than expected and up nicely from a year earlier. However, citing “both macro and execution issues”, management’s outlook for the January term did not live up to investors’ expectations, and the stock is down sharply ahead of the bell, as a result. October-quarter results from telecommunications equipment company Ciena Corp. (CIEN) were met with an equal amount of disfavor on Wall Street, and that stock is indicating a notably lower opening, as well. On the other hand, investors appeared fairly pleased with quarterly financials from homebuilder Hovnanian Enterprises (HOV), causing the equity to move slightly higher in pre-market trading. Elsewhere, shares of UNS Energy (UNS) are surging ahead of the bell, after the electric utility agreed to be acquired by Canada-based Fortis for $60.25 a share in cash, a 31% premium to its preannouncement closing price.  – 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 - When is good news bad news? Well, in recent weeks, it seems as though this is often the case, at least on Wall Street. On point, yesterday was just that sort of a day, as stocks fell steadily and notably from start to finish, with the unloading of equities picking up steam as the day wound down. And it may well have been a dose of presumably good news that triggered this notable setback (see below).

All told, by the close, the Dow Jones Industrial Average had fallen by 130 points, to near the day's low; the Standard and Poor's 500 Index had shed 20 points, or 1.1%; and the NASDAQ had tumbled 57 points, or 1.4%. However, it was in the mid- and small-cap arena where the most severe damage was authored, with the S&P Mid-Cap 400 plummeting 22 points, or 1.7%, and the small-cap Russell 2000 losing 18 points, or also 1.7%. Losing issues, moreover, swamped gaining stocks on the day. Obviously, it was not a good place for the bulls to be in the latest session.

So, just what was this good news that sent traders and investors rushing for the exits. Well, after the stock market had closed for trading on Tuesday, negotiators from the House and the Senate had fashioned a bipartisan deal on the budget. Assuming that this accord is approved by the full House and Senate--and the House is due to vote today--even though many do not like the major compromises contained within it, the odds of a future government shutdown will fall appreciably. But that is not the bone of contention, so to speak. What did have investors on edge was that with a future shutdown now no longer likely in the near-term picture, the Federal Reserve, which will hold its upcoming FOMC meeting next Tuesday and Wednesday, will be much more inclined to start tapering its very popular bond-buying program. The fear of tapering, or a slowdown in asset purchases, has been waxing and waning for weeks now. This latest budget deal, assuming passage, would seem to alter the landscape in favor of some Fed action, as the uncertainty engendered by the absence of a budget accord will be reduced.          

Overall, we now sense that a tapering stands a much better-than-50% chance of taking place next week. But even if the Fed does opt to slow down its asset purchases, it will likely do so gingerly. Moreover, we doubt that any tightening move, which would push borrowing costs up notably will be effected until 2015, at the earliest. Even so, investors are skittish, and these jitters are serving to push yields on Treasury securities, which are not Fed controlled, up in a steady stream this week. Of note, the yield on the benchmark 10-year Treasury note has climbed back up to 2.84%, while the yield on the companion 30-year Treasury bond has risen to 3.88%. Not only do the higher yields put pressure on economic growth by forcing borrowing costs up, but they have the potential to pressure stocks by making competing fixed-income securities more attractive. We aren't at such levels yet, in our view, but we may be only some 50 to 100 basis points away.

Aside from the Fed and some scattered earnings news, which have been underwhelming, to say the least, this morning, the week so far has had little for investors to contemplate. However, that is now about to change, as the government has just put out a weak report on initial jobless claims for the latest week, with that metric rising by 68,000. This number can be volatile and it does not change, in our view, the likelihood that the central bank will vote to taper its bond buying next week.

Finally, as to the markets thus far today, stocks were lower around the globe overnight and this morning, with our futures now pointing to a modestly softer start when trading commences in less than an hour from now.   – Harvey S. Katz

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