Loading...
 

After The Close - The U.S. stock market put forth a lackluster performance today. However, some consolidation at this point was not surprising, given the strong advances that we have seen over the past several sessions. All told, the Dow Jones Industrial Average, which dragged on the market, closed off 31 points; the broader S&P 500 Index declined just one point; and the NASDAQ managed to stay in positive territory, closing up 10 points. Market breadth was mixed, as advancing stocks were about even with decliners on the NYSE. The major market sectors were divided, as well. There was some strength in the industrials, and the energy sector made solid contributions. Yet, there was some weakness in the non-cyclical consumer names.

Technically, the stock market now seems to be in a better position than it had been several days ago. Just as a correction seemed to be unfolding, the bulls mounted an impressive buying campaign, taking back control of the market. From here, it will be crucial that the S&P 500 Index stays above the widely-watched 1,800 level. Further, it would be helpful to see some leadership emerge in the market, as often strength in a key sector can help to galvanize the mood, while pointing the way higher. Notably, there has been some leadership in the technology and healthcare areas in the past several months. So, it may be worth watching the stocks in these sectors. Meanwhile, the VIX was lower by about 14.3 today, suggesting that sentiment remains bullish.

Traders received no major economic news today. Tomorrow things pick up, as the weekly initial jobless claims are due out. Further, retail sales for the month of January are due to be released, and that will be an important item, as the consumer remains an integral part of the broader economy.

Meanwhile, December-quarter earnings reports continue to stream in. Today, we heard from Fossil (FOSL). That issue was up after the watch and accessories maker put out a healthy report.  Things were less favorable for Deere (DE). That stock closed lower, as some investors may be concerned about the outlook. - Adam Rosner

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

-

12:15 PM EST - For much of the morning, the major U.S. equity indexes bounced around the neutral line, but market sentiment has weakened in the last hour. Even the NASDAQ, which was some 20 points higher early on, has given most of its gains back. Thus, as we reach the midday hour on the East Coast, the Dow Jones Industrial Average is down 50 points; the NASDAQ is modestly higher; and the broader S&P 500 Index, which was relatively unchanged for much of the morning, is now off a few points.

As noted, market sentiment, which was mixed for much of today’s session, has weakened, Overall, advancing issues are leading decliners on the Big Board, but even that margin has narrowed significantly in the last hour and is now negative on the NASDAQ. Likewise, the S&P 500 Volatility Index (or VIX), also known as the “fear gauge,” is now higher after starting the day lower.

From a sector perspective, the 10 major groups are painting a similar picture as the equity indexes. Most of the sectors are little moved from breakeven, but are now showing a bit more red ink. Of note is the consumer staples sectors, which is the biggest laggard relative to the rest of the groups. Weighing on the performance of the consumer noncyclical sector is the stock of Procter & Gamble (PG Free P&G Stock Report), which is lower after the household products giant reduced its near-term outlook. Conversely, the biggest mover to the upside is once again the basic materials issues, which have performed very well over the last fortnight. Within the basic materials area, the stocks of the construction materials companies are the big winners so far today. That group got a big lift from shares of OwensCorning (OC), which jumped after the materials supplier reported strong fourth-quarter results.

Meantime, we have seen some big moves from a few individual stocks today. Joining the aforementioned Owens Corning in positive territory are shares of Dr Pepper Snapple (DPS), which hit a new 52-week high. Shares of the beverage producer rose on good quarterly results and strong guidance. Investors should also note the jump in the stock of Packaging Corp. of America (PKG). Why is this noteworthy? Given the nature of its business, the company’s superb quarterly results and, more importantly strong guidance, could be seen as a sign of good times ahead for the U.S. economy.  Conversely, Amazon.com (AMZN) is down today after the online retailer received a downgrade rating from a major brokerage house.

The corporate news took center stage today, as it was once again a very quiet day on the business beat. The only economic news of note was a 2% drop in U.S. weekly mortgage applications. (That data, though, may have been affected by weather-related issues just like some of the other economic reports of late.) This will change tomorrow as we are due to receive the latest report on monthly retail sales. - William G. Ferguson

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 SurveyThe earnings parade is still going strong, and investors are going over a number of reports this morning. The news was largely positive, and traders appeared pleased with December-period results from watch and jewelry designer and retailer Fossil (FOSL), global money movement and payment services provider Western Union (WU), farm equipment manufacturer Deere & Co. (DE), online travel company TripAdvisor (TRIP), beverage company Dr Pepper Snapple Group (DPS), and dialysis services provider DaVita (DVA). Indeed, all of these stocks are indicating higher openings this morning. – 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 - Make it four in a row for the bulls, those intrepid stock market optimists, who earlier this year had their complacency tested for a time, but who now are again apparently back in the driver's seat. As noted, yesterday's advance was the fourth in succession, with three of the four featuring large gains for the principal equity indexes.

Specifically, after a major selloff just a week ago Monday, in which the Dow Jones Industrial Average tumbled by 326 points, the market has made a full recovery, and then some, soaring on Thursday and Friday of last week, scoring triple-digit gains in the aforementioned blue-chip index, in the process. Then, after a near pause on Monday of this week, in which the Dow, in and out of the black for much of the session, finally closed up a scant eight points, the bull was at it again yesterday. And it came back in a big way.

The reason for the strong upturn, which commenced at the open and rarely faltered all session long, was the initial testimony before Congress by new Federal Reserve Chair Janet Yellen. In her remarks, the new Fed leader struck a dovish tone. To wit, Ms. Yellen said that the financial markets should expect the central bank to continue following the low-interest-rate path set in place by her predecessor Ben S. Bernanke, late last year. The fact that Ms. Yellen seems wedded to continue on this set path suggests that the bank is convinced that the modest hiccup in the economy in the present quarter is most assuredly weather related, a position we have been maintaining as well. 

Yesterday's fireworks, which included a stellar 193-point advance in the Dow (which led the upturn for a change) and gains of 20 points and 43 points in the Standard and Poor's 500 Index and the tech-heavy NASDAQ, respectively, reflected some sense of ease that the Fed not only contends that the economy's brief current pause is largely a weather-induced event, but also that the bank believes that the present emerging-market woes are not big enough to push the United States toward a recession.

We should also note that the Senate will have its chance to question the new Fed Chairwoman, as she is scheduled to testify before the senior Congressional chamber on Thursday. Meanwhile, Ms. Yellen had the stage to herself yesterday, as her remarks to a House committee did not have to contend with competing economic releases, as this was the second day of the first three days this week without any major releases. That will all change tomorrow, when the government is due to issue reports on retail sales and initial jobless claims, two metrics that will probably be affected to some degree by the weather. Then, on Friday, we are scheduled to see releases on industrial production, factory usage, and consumer sentiment. Thus, it should be a fairly busy end to the week. Then there is earnings season, which is fast concluding, but which had some negative surprises for investors yesterday, including cautious releases and guidance from packaged food giant ConAgra (CAG) and animal health provider Zoetis (ZTS). Both stocks weakened moderately over the course of this otherwise winning session on Wall Street. A more significant selloff, however, was suffered by Rackspace Hosting Inc. (RAX), which tumbled by almost 19% on the day, after the company posted disappointing results and its CEO announced his departure.    

As to the market, the latest succession of daily gains has quieted talk of a correction. Such observations had been making the rounds through last week, and have not fully run their course. But for now, the averages are easily out of the correction territory, which is defined as a 10% decline in the major averages. Japan and Hong Kong already have undergone their individual corrections, although the global markets, in general, have moved away from such a setback in recent days. In fact, Japan and Hong Kong were both higher this morning.

Now, a new day is about to get under way on our shores, after another winning session in Asia overnight. And in Europe, the key bourses are also tracking a little higher. Over here, meanwhile, some early strength has faded, and the futures show something of a mixed pattern ahead of additional earnings and a speech later today by St. Louis Federal Reserve President James Bullard. As to earnings, farm equipment giant Deere & Co. (DE) posted better-than-expected quarterly earnings and that stock is indicating a higher opening ahead of live trading. - Harvey S. Katz

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