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After The Close - The final trading day of a week that had a bearish tone for much of the five-day stretch—the Dow Jones Industrial Average, the NASDAQ, and S&P 500 Index all finished the week lower—proved to be a rather directionless one for the major equity indexes, though the aforementioned averages did retrace earlier losses and make some positive headway over the final few hours of the session. The advance/decline ratio also moved in favor of the former on both the Big Board and NASDAQ, after favoring the decliners for much of the day. Still, the lack of any major economic and earnings news, save for a report from banking giant Wells Fargo (WFC) on the latter front, likely contributed to today’s overall listless showing on Wall Street. The Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index were all modestly higher, while the S&P Mid-Cap 400 Index and the Russell 2000 were marginally in the red.

From a sector perspective, it was mostly up arrows among the top-10 sectors. The buying was most prominent in the telecommunications area, where the stock of industry behemoth Verizon Communications (VZ Free Verizon Stock Report) continues to appeal to investors. There also was interest in the basic materials, healthcare, and technology sectors. Within the highest-weighted tech sector, shares of the social media companies, including Facebook (FB) and Twitter (TWTR), were in demand, along with the stock of industry titan Amazon.com (AMZN). Shares of Amazon jumped on news that the company has asked the Federal Aviation Administration for permission to use drones as part of a plan to deliver packages to customers in less than 30 minutes. Conversely, the energy and utilities issues were the day’s biggest laggards.

As noted, there was not much noteworthy news on this summer Friday for investors to digest. However, we did get the latest quarterly results from banking giant Wells Fargo—and the results were decent, with no surprises to push the financial stocks or the stock market in either direction. However, Wells Fargo shares finished lower as investors were disappointed with the company’s lower-than-expected home mortgage volume in the latest period. The Wells Fargo report, along with Tuesday’s quarterly results from Alcoa (AA), were the highlights from the first handful of days of the second-quarter earnings season. Alcoa stock, in fact, continues to rise.

That said, it will be a whole different ballgame for the investment community next week, as the news will pick up significantly on both the earnings and economic beats. On the latter front, we will get reports on retail sales, producer (wholesale) prices, industrial production, and housing starts. We will also get the latest Beige Book summation of economic conditions from the Federal Reserve on Wednesday afternoon. Meanwhile, the earnings news will heat up, specifically on Tuesday, when Dow-30 components and industry titans JPMorgan Chase (JPM Free JPMorgan Stock Report), Goldman Sachs (GS Free Goldman Sachs Stock Report), Johnson & Johnson (JNJ Free J&J Stock Report), and Intel (INTC Free Intel Stock Report) release their latest quarterly results.

Looking ahead, we will not be overly surprised if a tug-of-war continues between the bulls and the bears over the next fortnight. If the economic and earnings news continues to provide positive headlines, as many expect, investors will wrestle with whether to increase their commitments in a market were valuations are frothy. Our sense is that the bulls may win the near-term battle, as the Federal Reserve’s continued accommodative monetary policies have provided few attractive investment alternatives to stocks for investors. - William G. Ferguson

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

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12:20 PM EDT - After posting declines in three of the last four days, the markets traded in mixed fashion this morning, as participants appear to be parsing the details coming out of Europe. Specifically, concerns over financial irregularities at Portugal’s largest publicly traded bank, Banco Espirito Santo, sparked unpleasant memories of Europe’s sovereign-debt crisis of a few years back, sending global equity markets into a brief tailspin yesterday.  However, it appears that assurances from Portugal’s government and its central bank that the country’s financial system was in good shape have served to calm traders this morning.

Not surprisingly, while equities appear headed for their worst week in months, safe-haven investments have enjoyed some renewed favor in recent days. Notably, 10-year Treasury yields (which move inversely to prices) are down about 10-basis points for the week, marking their largest decline since March. Meanwhile, gold prices are also at their highest levels in about four months.

As we crossed the noon hour in New York, the Dow Jones Industrials were in the red by about 30 points, largely weighed down by declines in Chevron (CVX - Free Chevron Stock Report) and ExxonMobil (XOM - Free ExxonMobil Stock Report). The broader S&P 500 index was also down, if only slightly. Meanwhile, the tech-laden NASDAQ, which, unlike the other two indexes, had spent most of the morning’s session in the black, had settled in just a few points above breakeven.

Across the Atlantic, the key European bourses started their respective trading sessions on the upside, but sentiment appeared to lose momentum as the afternoon wore on. France’s CAC-40 managed to hold onto a gain of about one-third of a percentage point, while London’s FTSE closed up about a quarter percent, and Germany’s DAX was just a hair above breakeven as the morning ended stateside. – Mario Ferro

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

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Stocks To Watchfrom The Survey – Today’s most notable earnings release is from Wells Fargo (WFC), one of the nation’s largest banks. Earnings of $1.01 a share were in line with expectations, although revenues were a bit better than anticipated. Nonetheless, WFC stock is down slightly ahead of the bell. Wall Street appears even less impressed with June-period results from Fastenal (FAST), and shares of the retail building supply company are down modestly in the premarket, in response. The biggest disappointment, however, seemed to come from Rent-A-Center (RCII), as the rent-to-own retailer said that second-quarter results would likely come in below investors’ expectations. RCII is indicating a sharply lower opening this morning, as a result.

Elsewhere, on the M&A front, tobacco companies Lorillard (LO) and Reynolds American (RAI) confirmed rumors that they are in talks regarding a potential acquisition of Lorillard by Reynolds American. LO stock is up moderately ahead of the bell, while RAI is indicating a marginally higher opening. – Matthew E. Spencer

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 - For a while yesterday, it seemed as though it would be a game of two halves on Wall Street, to use an old sports analogy, as the stock market, under pressure from overseas, notably in Europe, plunged at the open, with the Dow Jones Industrial Average, falling to a session nadir of 16,805--off some 180 points from the prior day's close.

However, after stocks failed to succumb to panic selling, the market steadied into the mid-session and then rallied further through the first part of the afternoon, with the aforementioned blue-chip composite nearly erasing its early losses. But the recovery then stalled and stocks fell back somewhat during the final hours of the session. Nevertheless, the intense selling that greeted investors at the start of the day did not reappear, as calmer heads prevailed. By the close, then, the Dow was off 71 points; the Standard and Poor's 500 Index was lower by eight points, or just about 40% of its loss in the morning; and the NASDAQ was down by 23 points. At the session's nadir, this technology laden composite had been off by almost 70 points. This partial retracement also incorporated the small- and mid-cap indexes.

Behind this early pullback were concerns about Europe, the oft-troubled Continent that has seen its share of economic reversals in the past few years. Now, those ills have proliferated in the past week, with the release of data showing some modest growth issues in Germany--the Continent's biggest economic player--and emerging economic problems in France and Italy. Add to that serious banking-related concerns in Portugal, one of the euro zone's more encumbered members, and the ingredients were there for a large setback, which is what we saw early yesterday on Europe's major bourses.

Then, those problems seemed to make a difference on our shores, and just one day after the bulls expressed a sense of relief that the Federal Open Market Committee had maintained a dovish monetary approach at its mid-June get together, traders were on the defensive again, and the selling was under way--at least for a time. One reason for the comparative sense of order on our shores is that the U.S. economy is continuing to improve. Not only have some recent key releases been supportive, but yesterday, we learned that the number of people applying for unemployment benefits in the first week of July had fallen more sharply than expected to the lowest level since mid-2007. That should have positive undertones for upcoming monthly employment and unemployment reports.

As to the market's various sectors, nine of the 10 industry groups gave ground in the session, with only the utilities edging upward. The big losers were the economically sensitive basic materials stocks and the consumer cyclical issues. Most of the Dow members headed lower, although among the telecom issues, Dow-30 component Verizon Communications (VZ - Free Verizon Communications Stock Report) gained some ground, as the high-yielding stocks seemed to again enjoy the loyalty of income-seeking and more conservative investors.

Now, this morning, the banking parade has gotten under way with the release, within the past hour of results from financial services behemoth Wells Fargo (WFC). That company reported on-target second-quarter earnings--rather than the profit beat some had been hoping for. That compares with a run of six consecutive quarters in which the bank had beaten forecast at at least two cents share. This time, though, results exactly hit the $1.01-a-share consensus mark. Moreover, with the stocks up almost nine percent in the past three months, expectations had been high for a profit beat. Not surprisingly, the stock is unchanged in the pre-market.

Finally, as we end the first full week of the month, we find that stocks in Asia were largely mixed overnight, with some losses booked in Japan. In Europe, however, the bourses are now rallying somewhat following yesterday's notable reversals. Over here, meantime, the S&P 500 futures are up slightly, with the early gains moderating some, perhaps in the wake of the Wells Fargo results. But the NASDAQ futures are up strongly, showing a pre-market gain of more than 12 points and thus suggesting that we could see some step up in buying in that sector at the open in less than an hour from now. - Harvey S. Katz, CFA

 

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