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After The Close - The U.S. stock market got off to a weak start this morning, and headed lower still in the afternoon. At the close of the session, the Dow Jones Industrial Average was off 110 points; the broader S&P 500 Index declined 14 points; and the technology-heavy NASDAQ dropped 34 points. Market breadth showed widespread selling of equities, as declining issues outnumbered advancers on the NYSE. Most of the market sectors traded lower, with pronounced weakness in basic materials issues. The industrials also lost ground. Nonetheless, the utilities moved up, as investors flocked to this defensive group. Further, the energy issues traded higher, helped by rising crude oil prices. Notably, oil prices jumped almost 2%, to about $107 a barrel. The move was probably due to political unrest in parts of the Middle East.

Technically, stocks have pulled back over the past couple of days, after rallying for a few weeks. Some traders may be concerned that a sharper correction could be in the works, but so far, the selling has been orderly. Meanwhile, the VIX jumped about 8%, to 12.57, today, suggesting that the mood may be shifting.

There were a few economic reports released this morning. Traders were not too surprised by employment news. Initial jobless claims came in at 317,000 for the week ended June 7th. This reading was up slightly from the prior week’s figure. Further, there was some improvement in the weekly continuing claims. However, the retail sales report was a bit disappointing. Notably, retail sales increased 0.3% in May, which was a bit weaker than many had been expecting.

Finally, we received a handful of corporate news items today. Shares of Restoration Hardware (RH) traded higher, as the home furnishings retailer issued strong figures and an upbeat outlook. Elsewhere, Lululemon (LULU) stock was off, after the upscale yoga apparel maker provided cautious guidance. - 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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12:15 PM EDT - The U.S. equity markets opened to the downside today, but were bouncing back from their mid-morning lows as we approached the noon hour of trading in New York. Trader sentiment, which tipped over to the sell side yesterday, was further weighed down by two economic reports issued this morning that came in slightly worse than expected. Specifically, the Commerce Department announced that retail sales for the month of May rose 0.3%, falling short of consensus estimates. Digging deeper into the numbers, we find that most of the gain was driven by increases in the automobile and home-improvement sectors. In fact, after factoring out cars, gasoline, food services and building materials, we find that the so-called core retail sales figure was unchanged in May. On a more positive note, April’s number was revised to a 0.5% increase, compared to the previously reported uptick of just 0.1%.

At the same time, we also learned from the Labor Department that first time applications for unemployment were up last week. The number filing initial claims for benefits rose by 4,000, to 317,000 for the week ended June 7th, whereas the forecast was for a small drop. Also weighing on investors’ minds was a jump in oil prices, as a flare-up in military activity in Iraq raised concerns over fuel supplies.

As of 12:00 EDT, stocks had recovered about half of their lost ground, with the Dow Industrial Average, S&P 500, and NASDAQ all showing losses of around one-third of a percentage point. Understandably, the oil & gas and precious metals sectors were among the few showing gains for the morning.

Taking a quick look at the overseas markets, we see that the European bourses bounced between positive and negative territory. But as their respective trading days were winding down we found London’s FTSE, Germany’s DAX, and Frances CAC-40 all hovering around the unchanged mark, and it appears that the U.S. markets may follow suit. – 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 Watch from The SurveyThe earnings calendar is very quiet today, save for lululemon athletica (LULU). The stock, which was once a Wall Street darling, is down sharply ahead of the bell, after the retailer of yoga-inspired athletic apparel and accessories released April-period financials and updated its guidance. Headline numbers from the most-recent quarter were actually pretty good, with sales and earnings coming in slightly above our forecasts. However, comparable-store sales climbed a scant 1% in the term. Moreover, management cut its fiscal 2014 guidance and announced that there would be more turnover in the executive suite, as CFO John Currie plans to retire by the end of the year. Clearly, these developments did not sit well with investors. – 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 - After two lackluster trading sessions to start the week, the action picked up yesterday, but unfortunately for those long equities it did not favor the bulls. Indeed, there was a bearish sentiment to trading, which, we think, was prompted by three events. The World Bank’s downwardly revised outlook for the global economy this year; news that Republican Eric Cantor—who is viewed by many as a “friend” of Wall Street and Big Business—lost his primary in Virginia and will now step down as House Majority Leader at the end of July; and reports of unrest in Iraq—and the impact it might have on the world’s oil supplies—spooked investors on a day when there was little economic and earnings news of note.

At the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index were down 102, six, and seven points, respectively. The large global names in the index of 30 bellwether companies were hurt by each of the aforementioned events.  It was also a down day for the small- and mid-cap markets. For the first time in several trading sessions, there seemed to be some demand for safe-haven securities.

From a sector perspective, the more economically sensitive areas, including the industrial and financial groups, were out of favor. Within the industrial space, which was the biggest laggard among the top-10 sectors, the stocks of the aerospace and defense companies were hit the hardest. We think this was due to some issues for a few of the major industry players. Over on the Continent, German airline giant Lufthansa said it would not reach its previous profit targets for the next two years, while European consortium Airbus suffered a big setback yesterday as Dubai-based Emirates Airline canceled a $16 billion order for 70 of the company’s new A350 passenger jets.

One group that did relatively well was the energy stocks. Rising oil prices, the product of the aforementioned unrest in oil-rich Iraq, drove energy stocks, particularly those of the oil and gas exploration and production companies, higher. The Iraq news, along with data showing a bigger-than-expected decrease in world oil supplies, more than offset the impact of the World Bank’s downwardly revised outlook for the global economy. Overall, the price of crude oil settled slightly higher yesterday, at $104.49 a barrel, on the New York Mercantile Exchange.

The trading overseas thus far today has been a mixed bag. Overnight, the major indexes in Asia were lower, which was probably driven, in large part, by the profit taking in the U.S. markets yesterday. However, things have been much better thus far today on the Continent, as most of the major European bourses are in positive territory.

Meantime, we just received our first notable report this week on the U.S. economy. Specifically, The Commerce Department reported that U.S. retail and food services sales for the month of May, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, increased 0.3% from the prior month and were 4.3% above the May, 2013 figure. The May tally was slightly below the consensus expectation of a 0.4% increase. At the same time of the retail sales release, we also learned that initial weekly jobless claims for the latest week rose modestly, to 317,000. Both of these reports were not as bullish as many would have liked and probably why the U.S. equity futures, which were higher earlier, have weakened some. The Dow and S&P 500 futures are slightly higher, while the NASDAQ futures are nominally lower. 

With less than an hour to go before the start of the new trading day on these shores, the aforementioned equity futures, which are relatively flat, are suggesting a mixed opening for the U.S. equity market. 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.