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After The Close - The U.S. stock market headed lower this morning, attempted to reverse course in the afternoon, but closed on a weak note. At the end of the day, the Dow Jones Industrial Average was down 42 points; the broader S&P 500 Index was off two points; and the NASDAQ was down 12 points. Market breadth showed a mixed performance, as advancing stocks were just about even with decliners on the NYSE. Most market sectors lost ground today. Some weakness could be seen in the basic materials names. Also, the healthcare sector slipped a bit. In contrast, the high-yielding utilities advanced. Notably, this defensive group has been a favorite among traders in recent weeks. Also, there was some strength in the energy sector.

Despite some weakness today, the S&P 500 Index has made strides lately. Further, it looks as if the broad index has finally moved beyond the trading range that it had been locked in for some time. Meanwhile, the NASDAQ has also firmed up in recent weeks. This is important, as it may suggest that speculative sentiment is still intact. Further, investor interest in the growth-oriented names, while not absolutely essential, can often serve as a driving force in bull markets.

Traders received little economic news this morning, and that may have contributed to the session’s muted tone. However, tomorrow the second estimate for first-quarter GDP is due out. Further, we get a look at the employment situation, as the weekly initial and continuing jobless claims are released.

Finally, traders received a mixed assortment of corporate news today. Specifically, Michael Kors (KORS) stock moved higher, as investors were pleased with the apparel company’s results. But, things did not go as well for DSW (DSW). That stock plunged after reporting weaker-than-expected results.   - 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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12:10 PM EDT - The U.S. equity market started the day with a few of the major averages, including the S&P 500 Index and Dow Jones Industrial Average, at or near record highs. That, along with the lack of major news on the economy and a rather quiet day for earnings, save for a few notable reports (see below), seemed like the recipe for some initial profit taking—and that certainly seemed to be the case for much of the morning hours. However, things have gotten a bit better for the bulls in the last half hour in a session that has been rather choppy. We are seeing uneven performances for the two aforementioned averages, along with the tech-heavy NASDAQ and the small-cap Russell 2000. Overall, the spread between declining and advancing issues remains in favor of the former on both the NYSE and the NASDAQ, but the gap is narrowing. Still, there is a slightly negative undertone to trading. It also is worth noting that volume has been high today, which had not been the case for the last few days.

From a sector perspective, it is has been mixed performance so far for the 10 major groups. Of note, the laggards are the basic materials, consumer discretionary, and healthcare stocks. In the basic materials group, the stocks of the mining & metals companies, as well as the steel issues are under notable selling pressure, while in the healthcare area, some of the diversified pharmaceutical stocks are out of favor. Conversely, there is some interest in the higher-yielding utilities and telecommunications stocks. This is not surprising as the yield on the 10-year Treasury note has fallen to its lowest level since July, and resides at 2.44%. The higher-yielding equities may be a more attractive investment alternative to fixed-income securities for those seeking income.

Speaking of the pharmaceutical companies, the relationship between Valeant Pharmaceuticals (VRX) and Allergan (AGN) remains testy, as the former continues to pursue its industry peer. This morning, we learned that Valeant has raised its unsolicited offer by $10-a-share in cash (total cash and stock consideration now stands at $58.30) for Allergan. We think this courting has the making of a long and arduous process. Shares of Allegan and Valeant are trading lower today despite the raised bid by Valeant. Staying in the mergers and acquisitions space, General Electric (GE - Free GE Stock Report) has also raised its bid to acquire France-based Alstrom today. The low interest-rate environment is spurring companies to make acquisitions, which is often viewed favorably by the market.

Meantime, we did get some earnings news from Corporate America. The headline report came from Michael Kors (KORS). The clothing retailer reported strong top- and bottom-line results and raised its outlook for the full year. However, shares of the retailer, which have been on a remarkable ascent since last year, were not too far removed from the neutral line on the report. Likewise, leading luxury homebuilder TollBrothers (TOL) reported strong quarterly results for its April term, and the stock, along with many of the other homebuilders, are modestly higher today.

Looking ahead to the remainder of the trading day, we would not be overly surprised if a tug-of-war emerged between the bulls and the bears. Investors will weigh some profit-taking opportunities against the lack of many other attractive investment alternatives to stocks. What we also might witness is some sector rotation. In recent trading sessions, there has been a sentiment toward cyclical stocks, but that may be changing a bit as seen by some of the early interest in the higher-yielding groups. - William 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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Stocks to Watch From The Survey-  As earnings season draws to a close, investors still have a few quarterly reports to peruse before all eyes head to the end of the June quarter.

For starters shoe retailer DSW Inc. (DSW) missed earnings expectations and reduced its full- year outlook. Weather and discounting took the brunt of the blame here.

Over in housing, Toll Brothers Inc. (TOL) posted earnings that doubled versus the year-earlier figure. Higher home prices and more deliveries powered this outperformance.

On the M&A front, Valeant Pharmaceuticals (VRX) raised the cash portion of its offer to purchase botox concern Allergan Inc. (AGN) by 21%. Now, the deal would equate to $166.16 a share versus the earlier figure of $152.89. - Erik M. Manning

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 - Wall Street started the final week of the often challenging month of May on a bullish note, with the more speculative NASDAQ and the small- and mid-cap indexes generally outperforming their conservative larger-cap counterparts in an altogether very impressive showing yesterday. May, as noted, is often a difficult month, with the time-honored "Sell in May and go away" mantra well known to equity holders of all stripes.  

This time around, though, things have been somewhat different. In fact, after some choppiness earlier in the month, the market is closing May strongly to the obvious delight of the bulls, with most sessions over the past week, or so, being clearly to the liking of these perennial optimists. Yesterday was just that sort of a day, as the equity market staged a wire-to-wire win, something that has become rather routine of late.

On point, the stock market opened strongly yesterday, and held those gains over the course of the trading session, ending the day near the session's highs. All told, the 30-stock Dow Jones Industrial Average rose another 69 points, to end the session at 16,675, while the Standard and Poor's 500 Index, which had closed just fractionally above 1,900 on Friday, gained 11 points more, to bring that index up to 1,912--a record. The NASDAQ, in the meantime, added 51 points, or better than 1%, very easily outdistancing the percentage gains posted by the Dow and the S&P 500, while the small-cap Russell 2000 Composite added more than 1%, as well, on the day, gaining just over 16 points.

Not everything had green arrows, however. For example, the basic materials and precious metals stocks turned in some uninspiring performances yesterday, with gold prices tumbling more than $25 an ounce, and gold issues, such as Newmont Mining (NEM), moving lower on the day. The more diversified metals producer, Freeport McMoRan (FCX), also fell back. On the other hand, the financials did especially well, with such mainstays as Bank of America (BAC) climbing nicely. The major telecoms, though, were a little weaker. Once again, technology outperformed, as underscored by the stellar gains for the NASDAQ.

As to other influences, the economic calendar was full, as we saw a somewhat better showing in orders for durable goods, which gained 0.8% in April. A decline of that magnitude had been the forecast. Also, a survey on consumer confidence, put out by the Conference Board, a private research organization, indicated a modest increase in May, which was in line with expectations. Finally, a survey on home prices noted that prices rose in the latest month, continuing an almost uniformly positive trend. However, the pace of the increases was slowing.        

Overall, our sense is that the economy is making some nice headway, following notable dislocations during the winter, and we could well be on pace for GDP to gain upwards of 3% this quarter. Note, too, that a revision to first-quarter GDP, initially estimated to have increased by a token 0.1%, will be released tomorrow morning. The latest estimate is that this pivotal metric will be revised downward to show a decline of about 0.6%. Should that downward revision be due to some reduction in inventory accumulation, it could well be bullish for the second quarter, as those depleted stocks would presumably need to be rebuilt. 

Looking ahead to a new session, after yesterday's stronger performance, we note that the principal indexes in Asia were broadly higher overnight, taking their lead from the strong aggregate gains stateside chronicled above. For Japan's Nikkei, the small 0.2% advance was the fifth straight win for that index. The lone news of note in Asia was the report of decelerating profit gains in China, as the metals sector suffered somewhat.

Now, in Europe, though, the principal bourses are working their way lower, with GlaxoSmithKline (GSK) among the stocks losing ground as the drug maker said that British regulators are probing its commercial practices. Finally, our futures are suggesting that we could see some further modest improvement at the open this morning, as the Dow, S&P 500, and NASDAQ futures are all in the plus column.   - Harvey S. Katz

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