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After the Close - The U.S. stock market got off to a strong start this morning, following back-to-back daily losses, but surrendered most of its gains as the session wore on. At the end of the day, The Dow Jones Industrial Average was off 19 points; the broader S&P 500 Index was virtually flat; and the NASDAQ was down two points . Market breadth was positive, with advancing issues outpacing decliners by about 2-to-1 on the NYSE.  Notably, the small - and mid-caps did a bit better, which lent some support. Most of the market sectors managed to advance, led higher by the energy, consumer cyclical, and basic materials names. However, the healthcare and services issues underperformed relative to other groups.

Technically, the S&P 500 Index may have been looking for some support just above its 50-day moving average, now located at around 1,427. Further, it should be noted that trading volumes have been light on days when the market has declined, and we have not seen exaggerated selling. Also, the VIX, often dubbed Wall Street’s fear gauge, actually headed lower today, indicating that investors were not too jittery. Notably, the reading of slightly over 15 on the VIX is still quite tame. However, the fact that the market could not hold its gains, and there was weak follow-through on the part of buyers in the afternoon, suggest that investors are a bit tentative about making commitments. So, the market probably does bear some watching here, in our view.

Some of the initial euphoria today was likely due to economic news. Specifically, it looks like progress is being made on the employment front. Initial jobless claims for the week ended October 6th came in at 339,000, which was more favorable than the figure analysts had been expecting, and lower than last week’s reading.  Weekly continuing claims were also down, helping to support the idea that things are looking better.  Meanwhile, on the broader economic front, the trade deficit for August came in at $44.2 billion, which was not too far from expectations.

Tomorrow we get a look at producer prices for September, as well as the University of Michigan’s consumer sentiment report.

Meanwhile, the third-quarter earnings season is starting to heat up. Fastenal (FAST) stock was trading higher, after the building materials company posted healthy third-quarter profits. However, shares of Safeway (SWY) slipped on mixed results.  It’s going to be a big day for the banks tomorrow when bellwethers JPMorgan Chase (JPM Free JPMorgan Stock Report) and Wells Fargo (WFC) issue their results.
In merger and acquisition news, Sprint Nextel (S) stock was up after the telecom provider reported that it is in talks with Softbank (SFTBY). Shares of Oshkosh (OSK) were rising on acquisition news, as well.   - 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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12:00 PM EDT - Stocks are looking to break out of this week’s mild slump today after a positive economic report on the labor market this morning and help from an upbeat tone in Europe. Just after noontime on the East Coast, the Dow Jones Industrial Average was up 25 points and the NASDAQ was seven points to the good. Both, however, were well off of their best levels. The strength is broad-based. Advancers were outpacing decliners by better than a three-to-one margin on the New York Stock Exchange.

Today’s market action comes on the heels of a 2% selloff in the Dow from Monday to Wednesday after it appeared earnings season would turn into a minefield for investors following Alcoa’s (AA - Free Alcoa Stock Reportuninspiring quarterly report on Tuesday and yesterday’s profit warning from Chevron (CVX - Free Chevron Stock Report). Those negatives had followed downbeat assessments from some other industry leaders in recent weeks.

However, Wall Street is taking heart from the Labor Department’s announcement that the number of Americans seeking unemployment aid fell by a very sizable 30,000 last week, to a seasonally adjusted 339,000. That is the lowest number filing applications since February 2008. At the same time, the four-week moving average fell to a six-month low, at 364,000. One rule of thumb is that weekly jobless claims consistently below 375,000 suggest hiring is strong enough to lower the unemployment rate.

These promising figures follow a report last week that showed the national unemployment rate fell below 8.0% for the first time since January 2009, and together are providing room for optimism regarding labor market conditions. More people working would be a major plus for consumer spending and the economy.

Meanwhile, the mood in Europe was hopeful today, judging by rising share prices across the Atlantic. The feeling seems to be that Spain’s financial problems are inching toward a resolution, most likely through a request for bailout funds.

As for the stock market’s various sectors, this session’s gains are translating into nice moves across the board. Energy stocks are among the day’s big winners, particularly shares of coal-mining companies, including Peabody Energy (BTU) and Alpha Natural Resources (ANR), which are enjoying better sentiment as colder weather sets in across the country. Cyclical consumer stocks, such as handbag maker Coach (COH), are also having a good day. And the financial sector is turning in a solid showing, with shares of Citigroup (C) and MasterCard (MA) up nicely on a percentage basis.

As this afternoon’s trading gets under way, the major averages, as noted, are well off their best levels of the day, but remain modestly in positive territory.   - Robert Mitkowski 

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 – Sprint Nextel (S) is in the spotlight today, after a major financial daily reported that the telecommunications company is in talks to be acquired by Japan-based wireless carrier Softbank Corp. for roughly $12.8 billion. At this point, neither company has commented on the rumors, but investors appeared to take the news seriously, as Sprint shares are soaring in pre-market trading.

On the earnings front, investors seemed pleased with quarterly financials from retail building supplies company Fastenal (FAST), as that stock is up moderately in the premarket. However, Wall Street looked less enthused about results from grocery store operator Safeway (SWY) and restaurant chain Ruby Tuesday (RT). Both of those stocks are indicating lower openings this morning. – 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 - The bears took it to the bulls for a second day in succession yesterday, sending stocks to a material, albeit somewhat lesser, loss than on Tuesday. All told, the Dow Jones Industrial Average fell by 129 points, following up on a 110-point drop the prior session; the NASDAQ eased 13 points, after a 47-point plunge on Tuesday; and the Standard and Poor's 500 Index shed another nine points.

Behind the latest selloff was an apparent disappointing start to third-quarter earnings season. That debut had commenced on Tuesday afternoon when Alcoa (AAFree Alcoa Stock Report), the giant aluminum company, had reported the narrowest of profits, after adjustments, on soft, but still somewhat better, sales. That performance, which was initially smiled upon, was, on second glance, not as welcoming. Moreover, forward guidance was disappointing. Our sense, meantime, is that this was an overreaction, and probably not indicative of the aggregate earnings picture for the just-concluded period.

At the same time, there are concerns about the global economy. Greece seems in freefall, with data out now showing a jobless rate of more than 25%; Spain is facing a real uphill climb to get its crumbling house in order; and now the International Monetary Fund is backing giving these two struggling nations more time to reduce their budget deficits. The IMF has cautioned that cutting too far, too fast, would do more harm than good. But Germany is suggesting that back-tracking on debt-cutting goals would only hurt confidence in the region. So there is clearly some disagreement on this subject.

Closer to home, there are lingering concerns about the pace of our own economic growth, with this nation, at least, in the midst of an expansion, albeit an unexciting one at this point. By contrast, much of the rest of the world is slowing down and most of Europe is in recession, or at least on the edge of one.

But much of the immediate concerns are over earnings, where in addition to Alcoa, we had a profit warning from fellow Dow-30 component Chevron (CVXFree Chevron Stock Report). This likely profit miss would seem to further confirm what many bearish pundits have already believed, namely that the third quarter was not a good one and that guidance could well be worse. Some of the bears also contend that such an outcome has not been fully discounted by the market, which even after the back-to-back setbacks is still somewhat extended at these levels. We will know more on the earnings side tomorrow, when JPMorgan Chase (JPMFree JPMorgan Chase Stock Report) and fellow banking giant Wells Fargo (WFC) issue their third-quarter results.

As to the economy, we had a ho-hum Beige Book economic summation issued yesterday, which did little to enliven either the bulls or the bears. Now, this morning, following three otherwise light news days, we have had a pair of key data issuances. First, the government reported that weekly jobless claims had fallen sharply to 339,000 from 369,000 the week before. The consensus estimate had been for a 370,000 level of new claims. At the same time, the August trade gap came in as expected at just over $44 billion. That was a bit higher than the July deficit of $42.5 billion.

These metrics were greeted warmly, especially, we sense, the jobless claims survey, which would tend to largely confirm the much better unemployment rate issued last week for September. Accordingly, with the Standard and Poor's 500 Index futures up by better than seven points and the NASDAQ in the black by more than 17 points, a strongly higher opening would seem to lie ahead when traders get down to business on Wall Street in about a half hour from now. – Harvey S. Katz

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