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After The Close - It was a ho-hum and, at times, choppy week of trading on Wall Street. Over the five-day stretch, we mostly saw half-hearted attempts by both the bulls and the bears to take control of trading, but save for one notable move by the bears, neither group was able to make much of a statement. Perhaps, the mixed economic news stateside and the fact that the tensions overseas did not intensify much over the final few days of this week, were behind the lackluster showing. The only notable move downward was prompted by comments from St. Louis Federal Reserve President Bullard—a noted policy hawk—that an interest-rate hike may come earlier than expected in 2015, given the falling unemployment rate and recent step up in inflationary pressures, particularly on the consumer side. All told, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index did not finish too far from where they started the week, with the tech-heavy NASDAQ producing a nominal (+0.7%) return.

The final day of the trading week was not much different than what we saw the first four sessions. Trading activity was once again lackluster, as the market continues to show signs of some consolidation. The day’s inactivity also was the result of normal summer Friday low trading volume. At the closing bell the major U.S. equity indexes were up modestly. The performances proved to be a microcosm of the whole week.

From a sector perspective, there were up and down arrows among the top-10 groups. We saw some leadership from the technology and consumer discretionary stocks. The increase interest in technology was the primary catalyst behind the NASDAQ’s advance. Within that space, shares of the software and computer hardware companies were in demand, while the footwear stocks led the charge in the consumer cyclical area. The performance of NIKE (NKE - Free NIKE Stock Report) was the key there, as the Dow-30 component rose on a strong quarterly report  earlier this week. On the other hand, the basic materials and energy sector—the latter of which has been a darling of Wall Street over the last fortnight on the concerns about the escalating tensions in Iraq—were the notable laggards today.

As noted, it was a busy—and mostly mixed—week of economic news. We think that this was a big reason why the major equity indexes did not make a pronounced move in either direction. Investors were focused on the economy, as the earnings news remained light. On the negative side, were disappointing data on GDP and durable goods orders. Conversely, investors were pleased with the latest readings on consumer confidence and new and existing home sales. The housing reports were welcomed, as they, along with good quarterly showings from homebuilders Lennar (LEN) and KB Home (KBH), were signs that this important sector of the economy is strengthening, albeit at an uneven pace. Next week, the economy will remain on the minds of investors, with the earnings schedule light during the holiday-shortened trading week. We will receive reports on manufacturing and nonmanufacturing activity, vehicle sales, employment and unemployment, and the trade gap.

Looking ahead, we would not be overly surprised if we saw a pickup in volatility next week. Trading volume is likely to be light, as many traders take an extended vacation around the July 4th holiday. Plus, Monday is the final day of the second quarter, and we would not be surprise if it prompted some “window dressing” trading.  Window dressing is a strategy used by mutual fund and portfolio managers near the quarter’s end to improve the appearance of the portfolio/fund performance before presenting it to clients or shareholders. Typically, managers will sell stocks with large losses and purchase high flying stocks near the end of the quarter, so that the latter are then reported as part of the fund's holdings. Such a strategy can also increase the volatility in the market. Finally, the situation in Iraq may at any moment unnerve investors. Adding all these variables up, we would not be surprised if the ride was a bit bumpy over the next few trading sessions. - William G. 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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12:05 PM EDT - The U.S. stock market is putting in a mixed session today, capping off a week that has been somewhat lackluster and uneven. At roughly noon in New York, the Dow Jones Industrial Average is off 26 points; the broader S&P 500 Index is essentially flat; and the NASDAQ, which is in positive territory, is ahead by eight points. Market breadth shows a divided performance, with rising stocks just about even with decliners on the NYSE. Nonetheless, there are some equity sectors making progress. Specifically, investors are showing an interest in the utilities today. Further, the technology stocks are holding up well. Also, the financial names, which had seen some selling yesterday, are staging a bit of a rebound. However, there is weakness in the basic materials group. The oil and gas issues are lower, too.

Technically, the stock market has spent much of the past week consolidating. This week’s trading puts the S&P 500 Index back to its 20-day moving average, which may well provide support. Traders are likely looking for direction, as the major averages have come a long way since mid-May. A clear catalyst for stocks may emerge from the upcoming second-quarter earnings season, soon to kick off. More important than actual quarterly figures will be the forward guidance that companies will be providing.

Meanwhile, traders received limited economic news this morning. As mentioned in the past, investors do not function well in information vacuums, and today’s lack of news probably does little to help matters. Nonetheless, the one report we did receive was generally positive. Specifically, the University of Michigan’s June consumer sentiment figure was finalized at 82.5. This was slightly better than had been expected. The news should pick up next week. On Monday, we receive a couple of important manufacturing releases, as well as a report on construction spending, while Tuesday begins the start of June data with a report on U.S. manufacturing.

Finally, a few important companies have reported results. Specifically, Nike (NKE - Free Nike Stock Report) stock is up modestly, after the sneaker maker put out an encouraging report. However, chemicals maker DuPont (DD - Free DuPont Stock Report) tempered its outlook, sending that company’s shares lower. Elsewhere, shares of KB Homes (KBH) are edging slightly higher, as investors seem pleased with the home builder’s release.
- 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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Stocks to Watch from The SurveyAlthough we are still a few weeks, or so, from the start of second-quarter earnings season, there were a few releases that came out yesterday evening and this morning, headlined by athletic footwear, apparel, and accessories giant NIKE (NKEFree NIKE Stock Report). The company delivered solid May-period results, as its heavy marketing spending ahead of the World Cup resulted in strong demand in North America and Western Europe. The stock is up moderately ahead of the bell, as a result. Other equities moving higher in the premarket on earnings news include homebuilder KB Home (KBH) and footwear retailer The Finish Line (FINL). Conversely, shares of DuPont (DDFree DuPont Stock Report) are indicating a modestly lower opening this morning, after the diversified chemicals manufacturer and Dow-30 component cut its second-quarter and full-year earnings forecast due, in part, to weakness at its agriculture unit. 

Elsewhere, the stock of The Manitowoc Company (MTW) is up sharply ahead of the bell, after Relational Investors announced that it has amassed an 8.5% stake in the manufacturer of cranes and foodservice equipment. The investment fund also urged Manitowoc to split into two separate companies, with each focusing on one of these core businesses. – Matthew E. Spencer

At the time of this article’s writing, the author had positions in NKE.

Before The Bell - Blame it on the Fed--at least that seems to be the logical explanation for the stock market's early, but sizable, selloff yesterday. For example, after equities began the trading day essentially mixed, they abruptly dropped, with the leading indexes generally posting losses of about three quarters of a percentage point at the day's nadir.

However, it is hard to keep a good market down for long, and by early afternoon those losses were pared back notably, with stocks making their familiar late-day charge. That has been the pattern not only for much of this year, but throughout much of the more-than-five-year-old bull market.

The impetus for this early chill, meanwhile, was the Federal Reserve, and, in particular, comments from St. Louis Fed President James Bullard, a noted interest-rate hawk. Mr. Bullard maintained that inflation may soon reach the lead bank's 2% target and that the jobless rate may fall under the 6% level by yearend. That would be below the Fed's estimates. Mr. Bullard also said that a rate hike by the Fed could take place by the end of the first quarter of 2015. That is somewhat before many are now forecasting.

Of course, we have been down that road before, with a number of central bank leaders opining on the imminent end of forgiving interest rates. And each time, the rate bears have been disappointed, as near zero short-term borrowing costs have continued in place. At some point, of course, this will change, and that would not sit well with the bulls, who have pushed equity prices higher on the backs of these historically low rates.

Of course, it wasn't just the Fed that was to blame for the latest setback on Wall Street. There also were a few less-than-fulfilling economic metrics that had been released at the start of the session, notably reports showing smaller-than-expected increases in personal income and consumer spending in May. On the other hand, initial jobless claims declined slightly in the latest week and remained near their post-recession lows, which is encouraging for aggregate job growth in the months to come.

Also, the market was initially rattled by some less-than-forgiving earnings reports, most notably from Bed Bath & Beyond (BBBY), the retailer of home goods, which posted unimposing fiscal first-quarter results and gave an outlook that missed expectations. Bed Bath shares tumbled more than 7% on the day, with its intraday loss having been in the range of 10%. 

This pullback in the market, however, did not balloon into something all that big, and, as noted, stocks began paring their losses by the early afternoon, finally pushing up to near the breakeven mark by late in the day, only to fall short of a complete turnaround by the close. However, the losses were muted, with the Dow Industrials, for example off by just 21 points. The NASDAQ, meanwhile, essentially broke even, with a loss of less than one point.

Now, this morning, we find a somewhat muddled situation, with stocks having been off rather sharply in Asia overnight, with Japan leading the way lower. In Europe, though, the principal bourses are tracking nicely higher at this hour. On our shores, meantime, the final trading day of the week and the penultimate session of the first half seems as though it will get off on a modestly weaker note, with a lower anticipated opening in chemicals giant and Dow component DuPont (DD - Free DuPont Stock Report) not helping matters. That industrial giant has cut its operating profit forecast for the second quarter and the full year, cutting some sluggishness in agricultural products components. - Harvey S. Katz 

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