After the Close - It was a seesaw day on Wall Street. The bears, who have had their way with trading for much of the last fortnight, save for yesterday’s outsized gains, returned to the market at the outset. Some negative tidings from the Continent and mixed earnings news on these shores, which included another discouraging report from Dow-30 component Hewlett-Packard (HPQ Free HP Stock Report), prompted the selling. Then, the indexes were able to recoup a good deal of the earlier losses by midday before statements from the Federal Reserve Chairman this afternoon brought back some sellers back in the afternoon. Still, after all was said and done, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index were relatively unchanged for the day.

From a sector perspective, it was pretty even among the top-10 groups. The positive included the healthcare and consumer noncyclical sectors. Today’s biggest laggards were energy and technology stocks, with the latter feeling the effects of the disappointing results from Hewlett-Packard. Not surprisingly, declining issues outpaced advancers on the tech-heavy NASDAQ, while the split was in favor of the latter on the Big Board.

The trading day on these shores opened with some discouraging news about France hanging over the world equity markets. Investors were a bit unnerved to learn that a major credit ratings agency had lowered its ratings on France’s debt. The downgrade for the euro zone’s second-largest economy also raised concerns about the 17-nation federation’s ability to stem the sovereign-debt crisis that has plagued the region. In addition, the same agency said that Italy’s banking conditions are negative right now. These two developments, though, were offset by reports surfacing out of Brussels that finance ministers have basically agreed on unfreezing loans to Greece, though timing is still up in the air. Most of the major European bourses finished the day in positive territory after a mixed showing earlier in the session.

On the earnings front, the eyes of the investment community were on computer giant Hewlett-Packard’s latest quarterly results. Unfortunately, investors bid the stock to a 52-week low, as they were not pleased with the company’s revenue miss and did not like an $8.8 billion charge related to serious accounting improprieties and misrepresentations by Autonomy Corporation before it came under the Hewlett-Packard umbrella. Shares of another struggling company, Best Buy (BBY), fell after the retailer reported disappointing results of its own today. The stocks of Bob Evans (BOBE) and Jack in the Box (JACK) were also lower on disappointing earnings news. Conversely, shares of Chico’s FAS (CHS), DSW Inc. (DSW), and Krispy Kreme Doughnuts (KKD) moved higher after those companies reported good results.

Today’s economic news once again came from the housing market and like yesterday’s report on existing home sales, the housing starts data issued this morning by the Commerce Department was encouraging. The latest two reports highlight an improving sector, one that is an important cog in the nation’s economic well being. Not surprisingly, shares of the homebuilders, including those of industry leaders Lennar (LEN), D.R. Horton (DHI), PulteGroup (PHM), and Toll Brothers (TOL) were higher again today.

However, investors were a bit unnerved later in the day by comments from Federal Reserve Chairman Ben Bernanke. In his speech at the Economic Club of New York, Mr. Bernanke said lowering interest paid on excess reserves is still an option, but such a maneuver would be seen as a negative for banks that would be forced to lend as opposed to leaving excess reserves at the central bank. The Chairman also noted that the government’s failure to work out a deal to avoid a fiscal cliff would likely push the economy back into a recession and that the lead bank does not have the tools to offset such a scenario.

Looking ahead to tomorrow, the earnings and economic news will be light. On the earnings side, the only notable report will come from heavy equipment maker Deere & Co. (DE), while the economic news will bring data on the leading indicators. With little information to ponder on either front, investors are sure to focus once again the looming "fiscal cliff" and the soap opera in the euro zone. Our sense is that action will be light as many traders get an early start on the Thanksgiving holiday—though investors should note that light volume can produce notable swings in the major equity indexes.   - William G. Ferguson

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

12:25 PM EST - The U.S. stock market opened lower this morning, but has managed to pare its losses. At just past noon in New York, the Dow Jones Industrial Average is up nine points (0.1%); the S&P 500 Index is up two points; and the tech-heavy NASDAQ is gaining four points (0.1%). Market breadth still suggests a mixed bias to the session, as declining stocks are now about even with advancers on the NYSE. The market sectors are somewhat divided, but turning positive. There is strength in the healthcare, capital goods, and consumer non-cyclical names, while there is weakness in the technology and energy issues. Notably, the Philadelphia Semiconductor Index (SOX) is still off a bit. This important technology index has been underperforming the broader market for several months.

Technically, the S&P 500 Index managed to move above its 200-day moving average, located at 1,383, yesterday. While this was positive, we will need to see some follow through on this move over than next few sessions. If it heads higher, the index may well hit some resistance at the 1,400 mark.

The news overseas has not done much to encourage traders. On the Continent, France’s debt was downgraded slightly by a major ratings agency. However the markets seem to have shrugged this off, as all the major bourses are now in positive territory. Further, the euro is up slightly at $1.28, suggesting sentiment is still a more positive.

The economic news was supportive today. According to the Commerce Department, housing starts for October came in at 894,000, which was better than had been expected, and also ahead of last month’s figure. Meanwhile, building permits came in at 866,000 for the month, falling short of expectations, but still ahead of last year. This data follow yesterday’s constructive housing-related reports. The Home Builders Trust (XHB) is up almost 2% today. Notably, the homebuilders as a group have greatly outperformed the broader market over the last year, suggesting investors are now well aware that a recovery is in progress.

The corporate news was mixed today. Specifically, computer giant, and Dow component Hewlett-Packard (HPQ - Free HP Stock Report) stock is falling sharply, after the company recorded a large impairment charge. In retail, Best Buy (BBY) stock is lower on weak results. But things may be getting better for Krispy Kreme (KKD), as the donut maker’s shares are higher on a good earnings release. - Adam Rosner

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

Stocks to Watch from The Survey Although many traders would probably enjoy getting an early start to the Thanksgiving holiday, most won’t be able to reach for the turkey just yet, as today is a busy day on the earnings calendar. Front and center is struggling technology company and Dow-30 component Hewlett-Packard (HPQFree Hewlett-Packard Stock Report), which delivered another disappointing bottom-line report. Notably, HP was forced to take an $8.8 billion asset impairment charge in the October period related to indicated “serious accounting improprieties, disclosure failures and outright misrepresentations” at Autonomy Corp., the U.K.-based company it acquired in 2011. (The accounting issues reportedly took place before the merger.) HPQ shares are trading sharply lower in the premarket as a result.

Retailers are also in the headlines today, and investors appeared disappointed with earnings reports from Best Buy (BBY) and Urban Outfitters (URBN), as those stocks are trading lower ahead of the bell (especially BBY). On the other hand, shares of Chico’s FAS (CHS) and DSW Inc. (DSW) are indicating nicely higher openings this morning on earnings news.

Restaurants and packaged-food companies are the other groups to keep an eye on this morning. The big winner in this space appears to be restaurant operator Krispy Kreme Doughnuts (KKD), as its shares are up sharply in pre-market trading. Conversely, shares of H.J. Heinz (HNZ) and Campbell Soup Co. (CPB) are both down a bit ahead of the opening bell. – 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 - The bears were stopped in their tracks yesterday, as some easing of concerns about the looming fiscal cliff helped equities build upon Friday's modest gains to turn in one of their better performances of the year. In all, the Dow Jones Industrial Average, which started the session on firm ground, never looked back, beating back any and all attempts to short circuit the rally. So, by the end of the day, that 30-stock blue chip composite had soared by 208 points. Moreover, the gains for the other averages, most notably the NASDAQ and the Standard and Poor's 500 Index, were proportionately better. Also, not surprisingly, gainers swamped losers on the Big Board and the NASDAQ, as did new highs to new lows on the NYSE. The latter still led on the NASDAQ, however, attesting to the market's weakness over the past fortnight.

Among the leaders in this impressive comeback were the banks, led by banking behemoth and Dow-30 component Bank of America (BACFree BofA Stock Report). That issue rose by a bit more than 4% on the day. Also showing strength ahead of its pending quarterly earnings report was Hewlett-Packard (HPQFree HP Stock Report). The ailing computer maker saw its shares rise better than 3% on the day to close the session at $13.30. However, this morning, the tech giant posted a 6.7% decline in revenues for the three months ended on October 31st, which fell well short of expectations, as the company's share of the personal computer market fell and sales of its printers declined. The Dow component, which, as noted, closed at $13.30 a share yesterday, also warned about its fiscal first (January) quarter, and is indicated to open the session this morning at below $12 a share. The issue, it should be noted, traded as high as $30 a share in the past 12 months.

Meanwhile, doing well among companies that reported yesterday were Lowe's Cos. (LOW), which jumped by more than 6% on better profit news, and Tyson Foods (TSN), as the meat processor's chicken business returned to profitability in its latest three months.

But the big news was the feeling among investors that the more reassuring statements coming out of the Congressional leadership over the past three days, suggests that a deal to avert the dreaded fiscal cliff of mandated tax increases and spending cuts could, indeed, take place. The deadline for reaching some sort of deal is January 2, 2013. Our contention right along has been that a compromise will somehow be fashioned notwithstanding the contentious climate in Washington. Still, this is by no means a done deal, as positions remain quite hard. But at least the language implies some room for possible compromise.

As for the day ahead, the market is now suddenly less overbought, and in Europe overnight, stocks were lower after a ratings agency removed France's coveted AAA credit rating. The losses were small on the Continent, though. Over here, meanwhile, the futures are suggesting some mild profit taking at the outset. On a brighter note, the Commerce Department has just reported that housing starts rose in October to their highest level in more than four years, reaching 894,000 units on an annualized basis. Expectations had been for a modest drop in such building. However, the Northeast saw a dip in starts, perhaps a consequence of last month's devastation from Hurricane Sandy. Overall, though, the report was a very good one. Still, Wall Street apparently has other things on its mind, as the futures hardly moved on this encouraging metric and, as indicated, suggest no aggregate move in either direction. – Harvey S. Katz

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