After The Close - The month of January has thus far proven to be a rollercoaster ride for those invested in the U.S. equity market—and, for that matter, most of the international stock markets. After a rather seamless ride in 2013, which saw the major U.S. market averages, particularly the Dow Jones Industrial Average and the S&P 500 Index, set numerous new highs along the way, 2014 has, to date, been a bumpy ride for investors. This volatility is noteworthy, as many market pundits believe that the trading patterns exhibited in the first month of the year can be a microcosm of things to come. If this were to be the case, we could be looking at a volatile 11 months to follow and possibly lower 11 months—and probably nowhere near as smooth a ride for the bulls as witnessed during the last four-plus years. 

The bulls, notwithstanding, did show some fight today, as all of the major market averages forged ahead, reversing much of the damage inflicted during yesterday’s selloff. The NASDAQ, though finishing in the plus column, did not come close to retracing even a portion of Monday’s losses, owing to a disappointing showing from Apple (AAPL) stock. Pushing the equities forward appeared to be some bargain hunting after five consecutive days of selling and some positive earnings news from Corporate America (more below), save for concerns about Apple’s lowered revenue guidance. At the closing bell, the Dow 30, the NASDAQ (which was the last index to join the festivities today), and the S&P 500 Index were 89, 14, and 11 points higher, respectively. It also was a nice bounce-back day for the small-cap Russell 2000 and the S&P Mid-Cap 400 Index. Overall, advancing issues led decliners by a sizable margin on both the New York Stock Exchange and the NASDAQ.

From a sector perspective, there was much to like, as most of the 10 major groups were in positive territory. There was definitely some sector rotation in play, as the utilities and telecom stocks, which held their own during yesterday’s bear market, were only of mild interest to investors. Technology also was a relative underperformer. We chalk this up to some appetite among traders for risk today. In the same vein, the price of gold, which is viewed as a safe-haven instrument, fell, and the S&P 500 Volatility Index (or VIX), often referred to as the “fear gauge,” retreated. The industrial, consumer staples, and energy stocks were the big movers to the upside today.

As noted, it was another busy day of earnings news. On the negative side was a lackluster first-quarter earnings performance and cautious second-quarter revenue outlook from Apple—and shares of the tech behemoth fell on the news. Conversely, investors liked what they saw from homebuilder D.R. Horton (DHI), cable operator Comcast (CMCSA), and Dow-30 component and Pfizer (PFEFree Pfizer Stock Report). All in all, it appeared to be a constructive day for earnings, which helped some indexes regain all of yesterday’s lost ground—and then some.

Meanwhile, the economy made for a mixed reading. On the negative side was a 4.3% decline in durable goods orders during the month of December and a slight dip in monthly home prices, according to the latest S&P/Case Shiller report. Those reports were more than offset by a better-than-expected report on consumer confidence from the Conference Board. Specifically, the private group reported that is Consumer Confidence Index increased from 77.5 in December to 80.7 this month. This report was greeted favorably by investors, giving, in particular, a nice boost to the consumer-related stocks.

Looking ahead to the rest of the week, we would not be surprised if the rollercoaster ride continued for investors. There are many factors in play over the next three sessions, some of which have the ability to single handily push trading in either direction, including tonight’s reaction to President Obama’s State of the Union address, tomorrow’s statement on monetary policy from the Federal Reserve, Thursday’s initial report on fourth-quarter 2013 GDP, and a slew of noteworthy earnings report from Corporate America. On the earnings front, investors will be focusing on AT&T’s (T - Free AT&T Stock Report) and Yahoo!’s (YHOO) latest quarterly results, which were due after today’s closing bell. The consensus is that the latter company earned $0.38 a share on revenues of $1.2 billion. Yahoo shares, which rose 84% last year, have been notably weaker thus far in 2014, to the tune of a nearly 10% decline year to date. -William G. Ferguson

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

12:20 PM EST - The U.S. stock market pressed higher this morning, but may be losing some steam. At just past noon in New York, the Dow Jones Industrial Average is up 64 points; the broader S&P 500 Index is ahead seven points; but the technology-heavy NASDAQ is down five points. Market breadth still shows some healthy buying of equities, as rising stocks are outnumbering decliners by roughly two to one on the NYSE. Almost all of the market sectors are trading higher, which is encouraging. There is leadership in the basic materials issues, as the metals names are doing well today. Also, the financial issues are advancing with strength in the banks. However, technology stocks are slipping, owing to weakness in industry leader Apple (AAPL).

Technically, the U.S. market attempted to rally yesterday, but ultimately that effort was not successful, as the averages sold off in the afternoon. Selling during the last few hours of the session is often characteristic of a weak market, and suggests that traders are looking to exit positions as stocks bounce. Today’s effort seems to be a bit more successful, so far. However, we will have to see the market put in a decent finish later in the day for any possible confirmation. Also, we will want to see trading volumes pick up, suggesting broad based commitment. Meanwhile, sentiment seems to be bullish today, as the VIX is down about 7% to about 16.25.

There were a few economic reports released today and the news was mixed. Specifically, durable goods orders declined 4.3% in December, which was much weaker than had been expected. However, the consumer seems to be feeling better, as consumer confidence came in at 80.7 in January, up from the downwardly revised 77.5 figure logged in December. Meanwhile, traders may be looking to the Fed to issue some positive remarks, as the FOMC meeting is now in progress. Also, the President is slated to give the State of the Union address tonight, and that may be playing a role, too.

There were a few earnings releases this morning. As noted, Apple stock is off today. Even though the company beat expectations, some investors were looking for stronger iPhone sales and even hints of product innovation. Also in technology, Corning (GLW) put out decent quarterly figures, but that stock is trading lower on concerns about the outlook. Meanwhile, after the close we hear from several key companies, including AT&T (T – Free AT&T Stock Report), Amgen (AMGN) and Yahoo! (YHOO).  - 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 SurveyEarnings reports are coming in fast and furious, with today’s session highlighted by December-period results from computer and personal electronics icon Apple (AAPL). Investors were not impressed with the company’s latest quarterly financials (despite a solid bottom-line showing), and management’s outlook only added to the concern, causing the stock to fall notably in pre-market trading. Other equities moving lower ahead of the bell on earnings news include hard disk drive manufacturer Seagate Technology (STX) and glass maker Corning (GLW).

Conversely, investors appeared pleased with fourth-quarter results from chemicals company DuPont (DDFree DuPont Stock Report), drugmaker Pfizer (PFEFree Pfizer Stock Report), airline operator American Airlines (AAL), cable television provider Comcast (CMCSA), automaker Ford (F), steel producer U.S. Steel (X), homebuilder D.R. Horton (DHI), electronics company Sanmina (SANM), and office equipment manufacturer Lexmark (LXK), as all of those stocks are indicating higher openings this morning.

Shares of Cliffs Natural Resources (CLF) are up sharply ahead of the bell, too, after hedge fund Casablanca Capital announced that it has amassed a 5.2% stake in the iron ore producer and called for it to restructure and increase shareholder value through an increased dividend and other measures. – 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 tumbled abruptly late last week, with the Dow Jones Industrial Average losing almost 500 points on Thursday and Friday combined, tried to stave off further damage at yesterday's opening. In fact, early in the session, the Dow, underpinned by a stellar gain in the shares of Caterpillar (CAT - Free Caterpillar Stock Report), on better-than-expected quarterly results from this earth-moving equipment giant, pushed ahead by almost 60 points. However, that attempt at a rally didn't last long, and within a half hour, or so, that 30-stock composite was back in the red, along with the Standard & Poor's 500 Index, the NASDAQ, and the Russell 2000. In fact, these latter three indexes were notably weaker than the Dow, even after the blue-chip composite had joined the move lower.

Then, once stocks pulled back, the losses deepened into the lunch hour. At their worst levels of the morning, the Dow was off by almost 100 points; the S&P 500 Index was lower by 18 points and the NASDAQ, which had been materially weaker than either composite, was down by almost 125 points--a dramatic decline. It should be noted that the NASDAQ had led the way higher earlier this month; now, it is taking the brunt of the selloff. Adding to the angst among traders was a breakdown in technical indicators, especially the NASDAQ, which fell through its 50-day moving average in the selling spree. The S&P 500, meantime, dropped through 1,775, and that would be the next support now that 1,800 has been broached.

Encouragingly, for the bulls, though, stocks steadied in mid-session and soon began to work their way back. First to go positive was the Dow, which for a change was outperforming the other indexes. Then, the S&P 500 joined the party, moving cautiously into the plus column, as we came within 90 minutes of the equity market's close. However, neither the NASDAQ, nor the small-and mid-cap benchmarks could make it all the way back. And when the attempt at a late rally proved less-than-inclusive, the selling began again, albeit with less ferocity than earlier. In all, and allowing for gyrations along the way, the Dow concluded the session 41 points to the downside; the S&P 500 Index eased nine points (less than half its earlier deficit); and the NASDAQ fell 45 points, or just about a third of its prior loss. Altogether, the bulls took the bears best punch, and for now, at least, withstood the onslaught reasonably well, but that's it. Now, we shall see how each side fares going forward.

Behind this volatility and the early selloff in our markets and those across Asia and Europe yesterday, are rising fears regarding the health of the emerging markets. Of note, such markets had fallen to a several-month low last week, and most pundits conclude that the volatile emerging arena shows few signs of a bottom, even as equities in those markets get ever cheaper.

On a brighter note, the stock market did not stay down at its worst levels, as some buying on the dip, a strategy that had worked so well last year, was again put in place--at least for a time. Of course, with stocks so very extended and valuations stretched, such a strategy may not work all the time. Our sense is that should the bulls at some point abandon such a strategy on down moves, the market could encounter more in the way of sustained selling. For now, we apparently are not at such a point just yet.

As to other influences, the economy played a minor role, at best, yesterday, with a slightly disappointing report on new home sales hardly a game changer. That sector still seems to have its act together, and rising prices and low inventory suggest further modest gains could lie ahead this year. In addition to yesterday's housing data, we will get a survey on consumer confidence 30 minutes into today's trading session, while Thursday will bring reports on jobless claims and the first look at fourth-quarter GDP. Finally, Friday will see data on personal income, consumer spending, and consumer sentiment from the University of Michigan.

Then, there is the Federal Reserve, which begins its two-day FOMC meeting today. That get together then concludes tomorrow afternoon. The consensus is that the central bank will extend its monetary tapering efforts begun last month, although it could also decide that the recent turmoil in the emerging markets is so severe that it will slow the process down a little. We shall see tomorrow afternoon at just past 2:00 (EST).

As to the day ahead, the bourses were generally lower across Asia overnight, but in Europe, stocks are building on our somewhat better close this morning. As to our futures, the hoped-for bullish carry over, by those long equities, from the spotty late buying in yesterday's session, is continuing in the pre-market this morning, at least with regard to the Dow and the S&P 500 futures. But it is a different story on the NASDAQ, which is down rather appreciably, principally on disappointment over the quarterly guidance that was provided by tech icon Apple (AAPL) after yesterday's close. Apple shares, which closed at yesterday at $550.50, are indicated to open at about $508 a share this morning. - Harvey S. Katz 

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