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After The Close - The U.S. equity market took a breather today after last week’s strong advances by the bulls to cap off a volatile five-day stretch. Not surprisingly, there was not much conviction on the part of traders ahead of the commencement of monetary policy meetings for the Federal Reserve and the European Central Bank this week. Too, the economic and earnings news was light today, though both beats are expected to pick considerably over the next few days. Still, there was a bit of profit taking today following the aforementioned buying spree late last week. By the closing bell, the Dow Jones Industrial Average and the S&P 500 Index were nominally lower, while selling was a bit more pronounced on the NASDAQ. Declining issues led advancers on both the Big Board and the NASDAQ, though the margin was thin on the former.

From a sector perspective, nothing stood out. Among the 10 major groups, about half were in positive territory, led by the consumer noncyclical, telecommunications, and utilities areas. Conversely, the healthcare, industrial, technology, and consumer cyclical groups finished in the red. The pullback in technology was primarily responsible for the relative underperformance of the NASDAQ today. Not even a nice showing from shares of technology giant Apple (AAPL) was able to help the tech-heavy exchange out of red ink—fellow technology stalwart Google (GOOG) was weaker in  the latest session.

As noted, it was a rather quiet day on the economic front. However, that will change quickly with tomorrow’s releases of data on personal income and spending, and consumer confidence. We will also get the latest S&P/Case-Shiller report on home prices and the Chicago PMI. Investors, though, were a bit unnerved today by the latest Texas Manufacturing Index reading. The Dallas Federal Reserve’s monthly manufacturing survey came in at a disappointing negative 13.2—the consensus called for a reading of positive 2.5. The data added to the slight negative market sentiment today.

Meanwhile, corporate earnings did not provide much of a spark, as it lacked news from the industry heavyweights—no members of the Dow 30 reported. On the positive side, Cal-Maine Foods (CALM), the nation’s largest producer and distributor of eggs, reported a jump in May-period earnings and Western Digital (WDC) handily bested revenue and earnings expectations in the latest quarter. Conversely, shares of Arrow Electronics (ARW) declined after the distributor of electronic components and computer products fell short of expectations. The investment community is eagerly awaiting word from Seagate Technologies (STX), which was scheduled to report results after today’s close. The technology company is among a group of more than 50 companies that will report results after the closing bell.

There was some news on the merger and acquisition front. Over the weekend, Chicago Bridge & Iron (CBI) agreed to acquire industry peer Shaw Group (SHAW) for about $3 billion. Shaw stock jumped on the news. Meanwhile, the stock of struggling retailer Best Buy (BBY) moved higher after reports surfaced that suggest founder Richard Schulze is looking to take the company private.

Elsewhere, trading sentiment was more upbeat overseas, with Germany’s DAX, France’s CAC-40, and London’s FTSE-100 all finishing more than 1% higher in the latest session. In the process, European shares hit a three-month high, closing above a key technical level. The bullish sentiment is being fueled by growing expectations that both the European Central Bank and the U.S. Federal Reserve will provide stimuli to support their economies.   - 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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12:30 PM ET - The U.S. stock market is putting in an underwhelming session today after a higher start. At just past noon in New York, the Dow Jones Industrial Average is off 33 points (-0.3%); the S&P 500 Index is lower by about four points; and the NASDAQ, which is the weakest of the averages, is off 17 points (-0.6%). Market breadth suggests a somewhat mixed tone, as well, with declining stocks narrowly ahead of advancers on the NYSE. The market sectors are not showing much strength. There are some gains in the utilities, with notable weakness in the capital goods, consumer, and healthcare names.

Technically, the last couple of days of trading have given the S&P 500 Index a big boost. The Index is now only about 3% off the high of 1,420 hit in April and May just before the most recent correction started. Moreover, trading volumes rose a bit over the last couple of days, suggesting that the recent rally may have some staying power. However, today’s performance won’t likely add much.

While there was no notable economic news released today, this week promises to be full of reports, with several due out tomorrow. Meanwhile, traders are likely looking ahead to Wednesday’s FOMC meeting and accompanying interest-rate decision. Many traders are likely hoping that the central bank will once again take measures aimed at improving liquidity. Notably, the Fed has already delivered a couple of rounds of quantitative easing, as well as a somewhat exotic asset management maneuver, dubbed “Operation Twist”.  Also, on Friday, the government’s employment report for July is due out, and that market moving issuance never goes unnoticed. Expectations are not running too high, as the consensus believes that only 85,000 jobs were added to non-farm payrolls. The unemployment rate is expected to have remained at 8.2%, unchanged from last month’s level.

Moreover, traders are also likely awaiting news from the ECB, especially after the recent remarks from that agency’s President. Notably, the markets on the Continent put in a good session today, with all of the major bourses up over 1%.

Meanwhile, the corporate reports are still coming in. Lufkin Industries (LUFK) stock is trading lower after that company posted a disappointing release. Also, Trina Solar (TSL) is seeing its stock weaken on lower guidance. In merger and acquisition news, the Shaw Group (SHAW) is seeing its stock jump, as that company may well be acquired by Chicago Bridge & Iron (CBI).  – 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 Survey – The earnings parade continues today, though no members of the Dow 30 are scheduled to release quarterly financials. However, investors applauded Cal-Maine Foods’ (CALM) May-quarter results, as the nation’s largest producer and distributor of eggs saw its earnings climb sharply from the year-earlier period. The stock is up nicely in the premarket. On the other hand, shares of Arrow Electronics (ARW) are indicating a sharply lower opening, after the distributor of electronic components and computer products failed to meet investors’ expectations.

There was a bit of M&A activity over the weekend, the most notable deal being engineering and construction company Shaw Group’s (SHAW) agreement to be acquired by industry peer Chicago Bridge & Iron (CBI) in a deal valued at around $3 billion. Shaw stock is soaring in the premarket, while CBI shares are trading sharply lower. Additionally, machinery company Roper Industries (ROP) has inked a deal to acquire privately held Sunquest Information Systems, a maker of diagnostic and laboratory software, for roughly $1.4 billion. Roper stock is up modestly in pre-market trading. 

In other news, automaker General Motors’ (GM) Global Marketing Chief, Joel Ewanick, is leaving the company, after he did not thoroughly vet the financial details of a deal to sponsor a European soccer club. – 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 - Stocks roared ahead on Friday for a second day in succession, with the gains, which came to 188 points in the Dow Jones Industrial Average, putting that 30-stock blue chip composite above 13,000 for the first time since early May. The other averages ended the week in fine fashion as well in an all-encompassing rally that put the major indexes into the plus column for the week after a rocky start.

The impetus for the latest rally was further hopes that the European Central Bank would soon take broad steps to ensure the viability of the beleaguered euro zone and its battered currency, the euro. Just the prior day, the ECB President, Mario Draghi, had pledged as much, an affirmation that helped to underpin a two-day global rally in equities. Meetings were being planned and other banks in that troubled region were pledging similar action. Moreover, the bulls were emboldened by some better economic metrics on our shores, most notably the issuance of data early in the day by the Commerce Department.

Specifically, that government agency reported, an hour before the stock market opened for trading on our shores, that the U.S. gross domestic product had expanded by a modest 1.5% in the second quarter of this year. Now, while that was less than the upwardly revised 2.0% pace of growth recorded in the first period, it was still a little better than the forecast gain for the latest quarter of just 1.3%. In fact, some pundits had been forecasting that growth might have come in at just 1.0%, or so.

Moreover, there is also a growing belief that the Federal Reserve, which convenes its two-day FOMC meeting tomorrow will adopt some new measures to stimulate the sluggish U.S. economy. Most likely, such action will center around a new installment in the popular quantitative easing series--a sort of QE3. We will know more on that score Wednesday afternoon.

Thus, as we enter a new week, expectations for a positive outcome are high. Not only are there hopes that the euro zone will be kept together, rather than have some members, such as Greece, flee, but there is also some anticipation that the Federal Reserve will ride to the rescue, that U.S. corporate earnings will continue to exceed lowered estimates, and that the American economy will press forward in somewhat stepped-up fashion over the final months of this year.

All told, hopes are high, and when that happens, the stock market can get overbought in a hurry. We may not be there yet, as the leading averages are generally no higher than the upper end of their multi-month trading range. Nevertheless, with a very busy week upcoming on the news front, led by a number of key economic reports, including data on consumer confidence, personal income and spending, manufacturing, construction spending, auto sales, employment, unemployment, and non-manufacturing activity, the burden of proof may now shift to the bulls, who have had their way the past two sessions. In addition, there will be another parade of earnings reports to pour over.

As for the market, it pressed forward again in Europe overnight, but is mixed in the pre-market over here, with the Standard and Poor's 500 Index futures off by about four points and the NASDAQ futures ahead by some three points with less than an hour to go before the start of the new trading day. – Harvey S. Katz

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