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After The Close - After a mid-morning rally drove the major indexes into positive territory, the averages shed their gains as the afternoon progressed. The Dow Jones Industrial Average and S&P 500 each recorded new intraday trading highs, the eleventh-consecutive such session for the former, before falling below their respective breakeven lines. Ongoing optimism from the earnings front, coupled with encouraging, if not torrid, growth from the business beat remain the positive tailwinds for the market, despite the late-day spate of profit taking that lowered prices across the board. Due to more-mixed fundamentals among the small- and mid-cap equities, market breadth was even for most of the session, before ultimately favoring the decliners by a small margin at the final tally.

Thus far in the season, corporate earnings have only bolstered the already bullish stock market. About three-quarters of S&P 500 components that have reported have beaten top- and bottom-line estimates. Today, shares of luxury fashion retailer Michael Kors (KORS) were particularly strong, adding nearly 25% in market value following a positive report. This afternoon, after the closing bell, The Walt Disney Company (DIS Free Disney Stock Report) will reveal its most recent quarterly results. Though the House of Mouse is likely to boast of the potential for its filmed entertainment and consumer goods businesses, investors will be more focused on the performance of its cable networks, namely ESPN. The sports brand has been losing subscribers for several years amidst a broader migration of consumers away from traditional media distribution platforms. Looking at the sectors, notable strength in the technology and cyclical consumer goods was offset by the selling of basic materials, technology, and energy stocks, with the latter feeling pressure due to some uncertainty in the global commodity market.

As for oil, traders continue to exhibit caution as an international supply glut weighs on the industry outlook. U.S. crude lost $0.22 per-barrel on Tuesday, despite Saudi Arabia’s announced intention to lower its exports in September. The thinking is that if the prominent OPEC member leads by example, more members will attempt to reduce their respective production levels. Whether this strategy pans out remains to be seen, and traders are taking an appropriately cautious track until the market stabilizes. OPEC output was historically high in July, so we think investors are looking for more meaningful participation by a plurality of cartel members before pushing domestic oil prices sustainably above $50. News that Libya’s main drilling field is back at full capacity also hurt sentiment on Tuesday.

The NASDAQ had fallen into the red as we neared the closing bell, wrapping up a volatile day that saw the tech-laden index trade in a nearly 65-point range. In our view, the late-day selling can be mostly attributed to investors collecting profits in some of the more richly valued sectors. This would help to explain the NASDAQ’s slide, as well as the aforementioned pullback in basic materials equities. In fact, some geopolitical turmoil surrounding North Korea served to widen the losses, dragging each of the indexes to session lows. Barring any more breaking news developments, the rest of the week will be mostly concerned with earnings. With more than 30 S&P companies set to release results in the next few days, we believe the bulls can reassert their momentum by the end of the week. Stay tuned. – Robert Harrington

As of this article’s writing, the author did not hold positions in any of the companies mentioned.

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12:00 PM EDT - Equities opened lower this morning, but have since firmed up quite a bit. At noon in New York, the Dow Jones Industrial Average is ahead about 40 points; the broader S&P 500 Index is up six points; and the NASDAQ is higher by 24 points. There is a favorable bias to today’s session, with advancing issues ahead of decliners on the NYSE. The major market sectors are mixed, with strength in the technology, financials, and consumer stocks, offsetting weakness in the basic materials issues.

Meanwhile, there were no important economic reports released this morning. However, tomorrow should be a more active day. Specifically, we will get a glance at the preliminary second-quarter productivity numbers. Wholesale inventories for the month of June will also be reported. On Thursday, the Producer Price Index for June, as well as the latest weekly initial jobless claims are due out.

Elsewhere, at this point in the second-quarter earnings season, we are starting to hear from many small and mid-sized companies. Of note, shares of Michael Kors (KORS) are soaring today, after the apparel retailer delivered better-than-anticipated results and provided an upbeat outlook. In contrast, shares of Dean Foods (DF) are off sharply after that company posted weak results.

Technically, stocks continue to make progress, as traders weigh an encouraging corporate outlook, and improvements overseas, against political uncertainty in Washington. - 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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Before The Bell - Following a rather eventful week on Wall Street, as one month ended and another one began, with a succession of all-time highs being set amid some mixed economic data being issued, the latest five-day span began with prices initially headed somewhat higher. On point, the old week featured confirming evidence that the economy was still pressing ahead, if irregularly. Specifically, the reports showed a solid level of manufacturing growth, a slowing rate of non-manufacturing improvement, and a surprisingly strong employment report.

Taken together, such reports suggest that the nation's gross domestic product, which pushed ahead by a healthy 2.6% in the second quarter, likely would hold in that range during the current half. That was comforting enough for traders, who apparently see such a moderate pace of improvement as being sufficient for earnings to stay on an upward path, but not strong enough to encourage the Federal Reserve to notably tighten the monetary reins. So, the bulls continued to press the case, as the Street set one record after another last week.     

Given that still largely positive backdrop, it is not all that surprising that stocks have been on the ascent. After all, with solid, but not inflationary, economic growth, a cooperative and cautious Fed, and strong earnings, the market backdrop is positive enough to keep the bull alive. On the other hand, multiples are rather stretched, so the margin for error is quite small. Accordingly, although stocks continue to head higher, the gains are not easily secured. And that was the case again yesterday morning, as the initial gain was pared rather quickly.

But as has been the case this year, no serious selling took place. Thus, stocks again headed higher as the morning wound down, and the afternoon began. By midday, it looked as though another record in the Dow Jones Industrial Average would be set. The major beneficiaries yesterday were the consumer staples stocks, which performed nicely on the Dow. Slightly weaker performers included the energy stocks, which eased as oil prices fell, and some basic materials names, including recently weak Mosaic (MOS).

On the other hand, some tech names strengthened, as the NASDAQ, with a mid-afternoon gain of 30 points again led the way. One big tech name doing well yesterday was Apple (AAPL - Free Apple Stock Report), which pushed up close to another all-time high. Holding the 30-stock Dow down, with a sharp loss on the day was United Technologies (UTX - Free United Technologies Stock Report). That issue fell on news that it might be going after a major merger partner in Rockwell Collins (COL). The latter stock, not surprisingly, was ahead strongly.

Meanwhile, stocks stayed irregularly higher as the afternoon wound down, but stayed in a tight band throughout the afternoon. As the final bell sounded, the major averages were all in the black, with the Dow's 26-point gain securing that composite's ninth straight record close. A four-point advance by the S&P 500 Index and a 32-point surge by the NASDAQ rounded out the session. Going forward, we will get inflation data later in the week along with earnings reports from some of the nation's retail chains.

Looking out at a new day, we cast our eyes overseas and see stocks traded in a mixed pattern in Asia overnight, while in Europe so far this morning, the leading bourses are moving in sideways fashion. In other markets, oil is moving a bit higher; gold prices are up slightly; and interest rates are heading a touch higher. So, as we head further through the summer, with the economy moving modestly ahead, earnings outperforming, and the Fed being cooperative, the bulls should continue to roar. As to our futures, the early read is flat to lower.   - Harvey S. Katz 

At the time of this article’s writing, the author held positions in one or more of the companies mentioned.