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After The Close - The U.S. equity market spent the first part of the day in mixed fashion—the Dow Jones Industrials were up around 90 points this morning, while the NASDAQ was modestly lower—but as the afternoon progressed the sellers took the lead and the major equity indexes retreated. Pushing equities lower was some weaker-than-expected U.S. economic data (more below) and a warning from the International Monetary Fund (IMF) to world leaders that the risk of prolonged market turmoil in emerging markets and deflation in the euro zone are threatening the world’s improved economic prospects. The IMF also lowered its global economic forecast for 2014, which along with a hint from the Federal Reserve that it may soon be appropriate to raise the federal funds rate, also weighed on the market in the final two hours of trading.

By the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index were 90, 35, and 12 points, lower. Overall declining issues outpaced advancers on both the NYSE and the NASDAQ. The latter exchange was weaker throughout the session, while trading soured on the Big Board late in the day. Our sense is that investors also were a bit hesitant, especially with economic data that were not encouraging, to add to their positions in an equity market that is once again looking overbought. In fact, the broader S&P 500 Index was at one time today within a few points of its all-time high before the aforementioned selling picked up.

As noted, the economic news was far from stellar. Before trading commenced on these shores, investors received some weak data on new residential construction. Specifically, the Commerce Department reported that U.S. housing starts recorded their biggest drop in almost three years in January. Investors, as they have done with a few other weak economic reports this month, seemed to brush the decline off, blaming it on weather-related issues. However, most of the homebuilding stocks were lower following the building data. Also today, we received benign data on producer (wholesale) prices. The report was much as expected, but the continued low inflation environment has some pundits worrying about the possibility of disinflation or even deflation. The Federal Reserve also appears to be monitoring the situation, as it was noted in today’s FOMC minutes that some monetary leaders think it might soon be appropriate to the raise the federal funds rate and possibly begin tightening monetary policy, which is rarely viewed positively by equity market participants. This situation bears close attention, as much of the latest bull run was underpinned by historically low interest rates.

From a sector perspective, nearly all of the major groups finished in the red, with notable selling at the end of the session in a few of the sectors. The day’s biggest laggards were financial, consumer discretionary, healthcare, and industrial stocks. Conversely, there was some mild buying interest in the energy group.

On an individual basis, there were a few notable movers. Shares of Six Flags Entertainment (SIX) hit a 52-week high after the recreational company reported strong quarterly results. Conversely, the stock of Tesla Motors (TSLA) was down ahead of its earnings report due after the bell today. There was also some sharp movement in the steel and aluminum sectors. The steel stocks were lower, dragged down by shares of U.S. Steel (X), which recorded its biggest one-day drop in 17 months, while the aluminum stocks got a boost from shares of Alcoa (AA), which rose after reports surfaced that General Motors (GM) is working on an aluminum body pickup truck due out in 2018. - 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 EST - The U.S. stock market moved selectively higher this morning, but has since moved lower. At just past noon in New York, the Dow Jones Industrial Average is off one point; the broader S&P 500 Index is lower by three points; and the NASDAQ, which has been quite weak, is down 17 points. A few market sectors are still in positive territory. There is leadership in the energy names, as the equipment and services stocks are doing well. The basic materials issues are having a decent day, too, with gains in the aluminum names. Nonetheless, there is some weakness in the financial stocks, and in the technology issues.

Technically, the stock market has staged a dramatic recovery after a minor January pullback. In fact, the S&P 500 Index has advanced about eight out of the past 10 sessions, displaying quite a bit of follow through on the part of the bulls. Notably, some of these advances have been considerable. Currently, the broad based index is just a few points away from testing new 52-week high ground, and that will, no doubt, be an area to watch. Meanwhile, the VIX is trading a bit higher to about 14.48 today.

Traders received some weak economic news today. Specifically, housing starts came in at 880,000 units, annualized, for the month of January, which was well below the consensus forecast. Some of the shortfall may have been due to adverse weather conditions. Meanwhile, permits slipped a bit, as well, but to a lesser extent. Later this afternoon, the FOMC will release the minutes from its January meeting. As traders have been fixated on the Fed’s policies lately, some participants may be staying on the sidelines until after this release is out.

There were a few earnings reports released this morning. Nabors Industries (NBR) posted decent results, and that stock is up sharply. In the high-priced crowd, PaneraBread (PNRA) shares are trading higher, even though that company offered weaker-than-expected guidance. There was a bit of M&A activity to report today, too. Zale (ZLC) stock is higher, after Signet Jewelers (SIG) offered to purchase the company for $21 per share. - 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 Survey - Stocks to Watch from The Survey – A few companies are reporting results today as earnings season winds down. Amusement park operator Six Flags (SIX) posted better-than-expected figures for the December period, thanks in large part to increasing foot traffic, and the stock is moving modestly higher in premarket trading. Meanwhile, Omnicare, Inc. (OCR) reported disappointing fourth-quarter earnings, and shares of the pharmacy services provider were trading lower in the premarket. Elsewhere, The GEO Group (GEO), a REIT which operates correctional facilities, announced in-line results for the final quarter of 2013, and the stock was essentially unchanged on the news. – Sharif Abdou

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

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Before The Bell - Traders returned from their three-day President's weekend break yesterday and might just as well have continued on vacation, at least in terms of the Dow Jones Industrial Average, which spent the better part of the day weaving in and out of positive territory, before closing with a modest loss. In large part, the Dow's sloppiness was driven by a disappointing fourth-quarter earnings report from old-line blue-chip component Coca-Cola (KO - Free Coca-Cola Stock Report). That stock's one- and-a-half-point setback took the swagger out of the Dow, as did a less-than-compelling performance out of household products giant and Dow stalwart Procter & Gamble (PG - Free Procter & Gamble Stock Report), but it did not dull the appetite of equity market traders for less-pristine stocks domiciled in the more speculative quarters of the equity market.

To wit, the NASDAQ, boosted by strength in tech stalwart Google (GOOG), stole the show among the larger-cap components, gaining close to 40 points on the day, while the principal small-and mid-cap composites, namely the Russell 2000 and the Standard and Poor's Mid-Cap Index rallied notably, as well. All told, it was a modest win for the bulls, and put the market further away from last month's threatened correction.

In addition to stocks, the price of oil rocketed ahead gaining more than $2.00 a barrel in New York, while gold, off early in the day, turned up again later in the session, thereby extending its nascent winning streak. The gains in gold are not eye catching, but after the stealthy decline suffered earlier in the year, even this modest comeback must be viewed as encouraging. Gold, however, is lower so far this morning. Also gaining were Treasury issues, with yields, which move in the opposite direction of prices, pulling back somewhat. The reason for the drop in yields is the fact that the trend of the latest economic data continues to be weaker. Of note, yesterday saw the Empire State Index, an indicator of manufacturing activity in New York, fall to 4.5 in February from a relatively strong reading of 12.5 in January. Expectations had been for a much more muted decline, to 9.0.

Also, sobering for the economic bulls was the fact that a gauge of the confidence of home-builders hit a nine-month low yesterday turning negative for February on weakness in single-family home sales. In all, the Index dropped from 56 to 46 in a month. Any reading below 50 signals some pessimism. To be sure, these metrics, neither of which is all that closely tracked, can be explained away at this point, along with some other surveys, such as those on retail sales, industrial production, and job creation, as being weather related to a large degree. However, should this evolving softness last into the spring, when, presumably, the temperatures should climb, a more serious look and likely reaction will take hold.

Meanwhile, the stock market was due for a respite following the fireworks of the past two weeks, which has now seen the NASDAQ move nicely into the plus column for the year to date, while even with yesterday's contained setback, the Dow Jones Industrial Average is just modestly in the red for 2014. Going forward, we sense that the market may be overbought again in the short run. However, valuations while not cheap, are certainly not materially out of line given the paucity of attractive alternative investments, the historically low level of interest rates, and the muted level of inflation. Thus, we could well see stocks press forward further this year, even from their high perch, although the gains may be grudging, overall.

As for the day ahead, we have had a pair of rather important economic releases. In one, the Labor Department reported that the Producer Price Index rose by 0.2% in January, but the core price change, excluding food and energy, added 0.4. At the same time, the Commerce Department has issued data showing that housing starts skidded by 16% in January, as winter storms and record low temperatures made it too difficult in some locales for much building to take place. With spring still a month away, and with February proving to again be a challenge weather wise, we assume that next month's construction release will be problematic as well. However, as neither report was a surprise, the markets have not reacted all that much. At this point, and after mixed-to-lower performances overseas, the U.S. equity futures are weaker, with the S&P 500 Index futures off by four points, as are the NASDAQ futures.   - Harvey S. Katz   

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