Loading...
 

After the Close - Stocks spent Monday mostly in the red after being unable to follow up on Friday’s big gains. At the close, the Dow Jones Industrial Average was off 48 points; the S&P 500 gave up five points; and the NASDAQ lost seven points, or a lesser percentage than the Dow and the S&P. Market breadth was clearly biased to the downside, as well, on both the Big Board and the NASDAQ.

Investors were hard pressed to find a lot to be bullish about to open the work week. Concerns about the possibility of further sanctions on Russia because of the support it is seen as providing to the rebels in Ukraine who are thought to have mistakenly shot down a civilian aircraft last week are not helping. A number of European countries have held off on reducing ties to Russia, one of the region’s primary energy suppliers, because it would be bad for business. But the pressure is mounting to isolate Russia for its perceived bad behavior.

Remember that Russia, along with Brazil, India, and China, is one of the famed BRIC countries that drove global growth in the middle part of the last decade. Slower economic expansion from the BRIC nations has already affected the price of commodities, such as copper, and made less attractive the theme of owning the shares of companies producing basic goods.

If countries in the European Union feel the need to back off their relationships with Russia, it could cause some lost business or added expense in a region that is only slowly getting back on its feet after a steep recession, and from which some weak economic data arose last week. The chance that prospects for the world largest economic bloc will be dented further is not what equity investors want to hear.

Conversely, oil prices were helped by the rising tensions with Russia and the escalation of violence in the Middle East. Oil in New York trading rose more $1.70 a barrel as a result, to nearly $105.

For the bulls, there is the possibility that the focus will shift back to earnings and the economy. Earnings season is getting into high gear this week, with several Dow-30 components reporting on Tuesday. Tomorrow’s business news is also due to contain data on inflation at the consumer level and a fresh look at the housing market, in the form of existing home sales for June.  - Robert Mitkowski

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

-

12:35 PM EDT - The U.S. stock market headed this lower morning, but seems to have found some support. At just past noon in New York, the major averages are just off their session lows. Specifically, the Dow Jones Industrial Average is down about 73 points; the broader S&P 500 Index is lower by eight points; and the NASDAQ is slipping 18 points. Market breadth shows some underlying weakness to today’s session, as declining stocks are outweighing advancers by roughly two to one on the NYSE. Meanwhile, all of the market sectors are in negative territory. Specifically, some of the consumer and healthcare issues are quite weak. However, the technology names are showing some relative strength.
              
Technically, the market has been quite volatile for the past few sessions. This likely hints at some confusion among traders, and the need for clearer direction. Some of this may be due to the shifting, and somewhat unsettling, political developments coming out of Russia and the Middle East. Too, the second-quarter earnings season is now in full swing, and that may be contributing to some of the market’s choppiness.

Meanwhile, there were no major economic releases issued this morning. However, tomorrow, things will pick up a bit, as we get a look at the Consumer Price Index for June. The housing market will also be back on center stage. Specifically, existing home sales for the month of June are due out. We also get a look at the FHFA Housing Price Index.

Finally, traders received a few corporate reports to digest this morning. Notably, we heard from Halliburton (HAL). That issues trading slightly higher, as investors were generally pleased with that company’s results and outlook. Things did not go so well for Hasbro (HAS). That issue is losing ground, as the toy maker’s profits came in lighter than some had anticipated. Meanwhile, later today, we will hear from widely watched companies Netflix (NFLX) and Chipotle Mexican Grill (CMG). - Adam Rosner

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 SurveyEarnings season rolls on, with a number of companies releasing second-quarter financials this morning. Investors appeared pleased with several of the reports, including those from oilfield services provider Halliburton (HAL), drug developer Allergan (AGN), and financial services provider SunTrust Banks (STI). These stocks are all moving higher ahead of the bell, as a result. On the other hand, Wall Street appeared to take issue with results from toy maker Hasbro (HAS) and pet pharmacy PetMed Express (PETS), and these equities are down notably in the premarket, in response.

Elsewhere, shares of EMC Corp. (EMC) are indicating a nicely higher opening this morning, after reports surfaced that activist investor Elliot Management has acquired a 2% stake in the designer and manufacturer of high-performance storage products and software. Elliot apparently wants EMC to unload its roughly 80% stake in software developer VMware (VMW).

Tobacco companies are also in the spotlight today, after a Florida jury ordered Reynolds American (RAI) to pay $23.6 billion in damages to the widow of a smoker who died of lung cancer. Although the case will probably be appealed and the award reduced, the verdict did not sit well with investors. Indeed, Reynolds American stock is down modestly ahead of the bell, along with shares of industry peers Lorillard (LO), Philip Morris International (PM), and others. – 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 - The U.S. equity market put in an uneven performance last week, as both the bulls and the bears had their ways at times during the five-day stretch. The last two days were a microcosm of the whole week, with the major averages falling sharply Thursday on international concerns, only to quickly regroup and move markedly higher on Friday on the strength of another round of mostly encouraging earnings reports from Corporate America. That was the case all week long, with the bulls helped by supportive earnings and economic news—save for a disappointing report on housing starts for the month of June—while the bears were at times emboldened by the ongoing turmoil in the Middle East and, more so, in Ukraine.

When all was said and done, it was still another winning week for equities, one of many during the current five-plus year bull run. Friday’s rather encompassing buying, which saw the Dow Jones Industrials, the NASDAQ, and the broader S&P 500 Index post respective gains of 123, 69, and 20 points, helped push the major averages into positive territory for the week. The most impressive aspect of Friday’ performance was that the bulls stepped back into the market in a big way—volume was heavy for a summer Friday. This scenario seems to be the norm these days in a market where there are few attractive alternatives to stocks with interest rates still near historical lows. Investors should note that the S&P 500 Volatility Index (or VIX), also known as the “fear gauge,” fell sharply, which was a quick reversal from Thursday’s uptick on event-driven concerns about Ukraine. It was also a sign that investors are still not shying away from adding more risk to their portfolios, but that could be tested at the start of trading today (see below).

Meantime, this week will bring another round of heavy earnings news, with several Dow-30 companies, as well as technology giant Apple (AAPL), scheduled to report their latest quarterly results. The business beat will also keep investors busy with data due on consumer prices, existing and new home sales, and durable goods orders. The consensus expectation is that the readings on both fronts will prove to once again be supportive for equities. That said,

The international scene remains a wildcard for the equity markets, and—as seen last Thursday—can change the sentiment of the market in short order. The new week begins with Ukraine blaming Russia and pro-Moscow rebels for the shooting down of a Malaysian airliner last week. Over the weekend, both the United States and the European powers pondered placing another round of trade sanctions on Russia. Such actions could impact the world financial and equity markets, and bear watching, especially with regard to the euro zone, as many nations in the federation do a good deal of business with Russia. As noted above, the elevated tensions in Ukraine and the Middle East have the potential to change the direction of trading in a New York minute.

With less than an hour to go before the commencement of trading on these shores, the equity futures are presaging a modestly lower opening for the U.S. equity market. Right now stocks in Europe, especially Germany, which does a sizable amount of business with Russia, are notably lower, as the concerns about escalating violence in Eastern Europe and possible harsher sanctions on Russia are weighing on the world equity markets. Stay tuned.   -  William G. Ferguson

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