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After The Close - Equities drifted sideways this morning, weakened notably in the early afternoon, but then rebounded in last hour of trading. At the close of trading, the major averages had managed to land in positive territory, with the Dow Jones Industrial Average, the broader S&P 500 Index, and the NASDAQ, all nominally higher. Nonetheless, there was a negative tone to the day, as decliners led advancers by about two to one on the NYSE. From a sector perspective, weakness was seen in the basic materials issues, as well as in the industrial names. However, some strength was found in the healthcare and consumer non-cyclical stocks.

The nation’s employment situation remains at the center of attention. Yesterday, Automatic Data Processing (ADP) delivered a report showing a nice gain in the labor markets in the month of February. Today, the Labor Department reported that initial jobless claims came in at 243,000 for the week of March 4th, which more or less met analyst expectations. Meanwhile, tomorrow morning the Labor Department will issue its February non-farm payroll report. This release will likely be carefully watched, as the Federal Reserve is expected to lift interest rates slightly at its next meeting, assuming that the economy and labor markets remain firm. The likelihood of such a move may be contributing to some of the market volatility that we have been seeing lately.

Meanwhile, in corporate news, shares of Tailored Brands (TLRD) tumbled, after reporting weak quarterly report and issuing a disappointing outlook. However, shares of Signet Jewelers (SIG) moved higher, even though the company put out a mixed release.

Technically, stocks have retreated during the first days of March. Although, some profit taking is to be expected and may even be beneficial for stocks, as valuations have become elevated, in our view. - 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 EST - The major U.S. indexes had an up-and-down morning, rising early before shedding gains an hour into Thursday’s session. Investors are primarily focused on tomorrow’s monthly jobs report, and next week’s central bank meeting (discussed below). The S&P 500 and NASDAQ, which both began the day in the red, have struggled to sustain momentum, but have remained safely in positive territory as trading progressed. Likely due to developments on the political front, financials and healthcare stocks are driving the bullish case.

And, despite the majority of its equities trading higher on Thursday, the Dow Jones Industrial Average’s gains are being tempered by weakness from its tech components and the fallout from Caterpillar’s (CAT - Free Caterpillar Stock Report) accounting and tax issues. Market breadth is being held back by more hesitant trading amongst mid- and small-cap equities, where averages have toggled in and out of negative territory throughout the day, so far.

Looming over trading is the increasing likelihood that the Federal Reserve will tighten monetary policy at its March 14th and 15th FOMC summit. A streak of positive economic indicators has bolstered the case for a near-term hike, and the odds now stand over 85%. Tomorrow’s February jobs report from the Labor Department is the final piece of the puzzle. Barring a starkly negative release, the central bank will likely implement its first of multiple anticipated 2017 rate hikes next week.

Elsewhere, oil continues to exhibit weakness, as significantly higher U.S. crude stockpiles is poking holes in recent optimism. Accordingly, the energy sector was one of the biggest laggards during the morning trading, along with the basic materials grouping. As of the lunch hour in New York, the per-barrel price of U.S. crude was down $1.15, or 2.3%.

As the morning hours came to an end, the tug of war was still evident, with the averages looking more range-bound than in the early stages of the day. Each of the indexes was gaining steam at the noon hour. Still, with decliners holding a 1.6-to-1 lead over the advancing stocks, the bulls would need a broad-based turnaround in sentiment to negate the downward movement from preceding sessions. - Robert Harrington

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 back-to-back losses for Wall Street on Monday and Tuesday, which was the first time that the stock market had suffered consecutive declines since January, equities started yesterday's session modestly to the upside. Helping this early comeback was a stellar report on private-sector job creation from Automatic Data Processing (ADP). In that closely tracked jobs report, the payroll processing giant noted that employment rose by 298,000 in February, which was well above expectations. That issuance, meantime, will be followed tomorrow by the even more widely watched jobs release from the government.

This latter report from the U.S. Labor Department will be even more pivotal in determining Federal Reserve monetary policy, as the central bank gets ready for its March 14th and 15th FOMC meeting. That gathering seems almost certain to produce an interest rate increase next week. The odds of such a shift in monetary policy is now above 85%. Not surprisingly, after the ADP report's release, yields on the 10-year Treasury note jumped to 2.58%. That is near the high for the past 12 months. The 30-year Treasury bond, in the meantime, saw its yield rise to 3.16%.

The potential negative for stocks of higher Treasury yields has been creeping into market sentiment this week. Indeed, after that early modest rise for the major indexes yesterday, in which the Dow Jones Industrial Average gained almost 30 points, that index started to weaken and was soon under water, albeit modestly. However, the NASDAQ remained nicely higher in the early going, as did the small-cap Russell 2000. A lower Dow and higher NASDAQ divide in the market continued over the course of the morning, so as we reached the noon hour in New York, the market remained generally mixed.

Stocks then weakened as the afternoon got under way, with the Dow's deficit rising a bit, while the NASDAQ's gain was pared. The small- and mid-cap indexes also fell into the red, but not materially so. Then, by mid-afternoon stocks started to again strengthen for a time. But this follow-up recovery was all-too brief. Indeed, the Dow then weakened anew, pushing back to session lows, with a loss of some 50 points. The other composites, save for the NASDAQ, also fell into the loss column, as worries about tomorrow's jobs report and concerns the President might not be able to deliver on his promises in a timely fashion had started to hurt sentiment.   

The market then continued lower, with particular weakness in the energy sector (as crude oil prices fell more than 5% on the day on a further stockpile build) and in the basic materials category, with Dow component Caterpillar (CAT - Free Caterpillar Stock Report) falling sharply. In all, losing stocks held more than a two-to-one edge on gaining issues on the Big Board; on the NASDAQ, the ratio was still slightly in favor of the bulls. It seemed, as the afternoon wound down, that the market was weaker than the aggregate averages. Stocks continued to trend lower, but remained range bound until near the close when they weakened sharply.

All told, as the closing bell sounded, the averages were generally at session lows, with the Dow off 69 points, the S&P 500 lower by five points, and the S&P Mid-Cap 400 and small-cap Russell 2000 in the loss column by about half a percentage point each. Only the NASDAQ managed to show a gain, but it was a small one after the late fade. As before, losing stocks overwhelmed gaining issues on the NYSE. It was a weak close and was cause for some worries as the Fed meeting and tomorrow's jobs report both drew ever closer.    

Now, a new day starts, and looking overseas, we see that stocks were lower in Asia overnight, save for Japan. In Europe, meantime, the principal bourses are down moderately in early dealings this morning. As to our futures, as the bears seek to make it four down days in a row this week, the futures are suggesting a mixed open when stocks resume trading this morning. As to the day ahead, all eyes will be on jobs and the Fed. So, stay tuned.   - Harvey S. Katz

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