After The Close - Stocks turned in a constructive session today, closing near their highs, after it initially appeared a down day might be in store. After briefly falling more than 110 points this morning on concerns about the looming fiscal cliff and a disappointing report on new home sales, the market staged a turnaround when House Speaker John Boehner voiced optimism about a federal budget agreement.
At the end of the day, the Dow was up 107 points and the tech-heavy NASDAQ was ahead 24 points. Market breadth was broadly positive, with about two stocks rising for every one falling on the New York Stock Exchange.
The day’s advance was good to see, of course, but the intraday volatility highlighted stocks’ vulnerability to the perception as to how government talks are going regarding the recasting of preset tax hikes and spending cuts set to take effect early in 2013. High level negotiations between the White House and Congress are likely to be ongoing through December.
Consequently, any mention in a given day of progress or impasse by those involved could have an effect on trading. (Today’s gains were in contrast to yesterday’s selloff, sparked partly by Senate Majority leader Harry Reid’s suggestion that budget talks were not bearing fruit.)
The mid-afternoon release of the Federal Reserve’s Beige Book seemed to reinforce what many had assumed to be the case about the economy in the weeks through mid-November—specifically, that activity has been rising at a measured pace, but not uniformly. Consumer spending rose moderately in most of the 12 Fed Districts, although Hurricane Sandy clearly had a disruptive effect on the New York and Philadelphia regions.
At the sector level, consumer cyclical stocks were among the day’s winners, with shares of clothing accessories maker Coach (COH), and footware manufacturers Nike (NKE) and Deckers Outdoor (DECK) rising nicely. Some industrial names also shined, including shares of United Technologies (UTX - Free United Technologies Stock Report), although we note that every stock market sector was higher on the day.
Tomorrow brings the Labor Department’s weekly report on initial jobless claims, which is expected to drop below 400,000 after rising above that figure when Hurricane Sandy forced some businesses to close or temporarily shut down. There is also an important reading on second quarter GDP, where an upward revision is expected. A better-than-expected figure could get Wall Street excited. However, negotiations regarding the fiscal cliff appear set to remain a fixation for weeks to come, which could mean a series of shifting tides for investors. - Robert Mitkowski
At the time of this writing, the author did not have positions in any of the stocks mentioned.
12:20 PM EST - The U.S. stock market is putting in a choppy performance once again today. Specifically, after opening lower, stocks managed to reverse course. This is a positive indicator, and suggests that there is some support for equities at the current level. At just past noon in New York, the Dow Jones Industrial Average is off four points; the S&P 500 Index is down three points; and the NASDAQ is also now slightly lower. Meanwhile, market breadth indicates a mixed tone to the session, with advancing issues about even with decliners on the NYSE and the NASDAQ. The market sectors also show a lack of clear direction. There is relative strength in the conglomerates, consumer, and transportation stocks. However, there is some weakness in the energy and technology issues.
Technically, the stock market seems to be taking a breather, as traders look for direction. A somewhat lackluster third-quarter earnings season, ongoing concerns about Europe’s financial situation and the subsequent economic sluggishness in that region, as well as the widely-watched “fiscal cliff” issue confronting this country, are all likely keeping traders on the sidelines, at least for now. A clear indication that the politicians in Washington were making some decisive progress might serve as a catalyst for a year-end rally. However, for now the divided political climate is cause for concern.
Meanwhile, the economic news released today did not do much to help matters. According to the Department of Commerce, new home sales in October came in at 368,000, annualized. This showing, which was about even with last month’s figure, fell short of analyst expectations. It should be noted that economic figures can be uneven, especially during a recovery period, and that generally the housing market is showing progress. The Home Builders Trust (XHB) is trading lower, probably on today’s news. Meanwhile, the Fed’s Beige Book summation for October is due out later today, and that may also be creating a tentative tone to the session.
Today’s corporate news was mixed, as well. Shares of Green Mountain Coffee Roasters (GMCR) are up sharply on a stronger-than-expected report. Favorable results from American Eagle (AEO) and PVH (PVH) are sending those stocks higher, as well. But, Fresh Market (TFM) stock is off on worries about its outlook.
Other stocks advancing sharply today include: Sauer-Danfoss (SHS), Express (EXPR), and Gulfport Energy (GPOR). Declining issues include: Jos. A Bank (JOSB), and Mellanox Technologies (MLNX). - 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 – A number of stocks will likely see active trading today because of earnings news. Green Mountain Coffee (GMCR) appears to be the big winner, as that stock is soaring in the premarket, after the coffee roaster and distributer reported better-than-expected September-period results. There was good news on the retail front, as well, and investors appeared pleased with October-quarter results from American Eagle Outfitters (AEO) and Express (EXPR). Both of those stocks are moving sharply higher in pre-market trading as a result. Meantime, shares of apparel company PVH Corp. (PVH) are trading just slightly higher in the premarket on earnings news. On the other hand, shares of The Fresh Market (TFM) are plunging in the premarket, as the specialty grocer’s October-period results disappointed investors. The same is true for the stock of semiconductor outfit Analog Devices (ADI), which is indicating a moderately lower opening.
Elsewhere, shares of Knight Capital Group (KCG) are surging ahead of the bell, on news that Getco Holding Co. has offered to buy the struggling securities brokerage company for $3.50 a share. Additionally, Costco (COST) stock is indicating a modestly higher opening this morning, likely due to the $7.00-a-share special dividend that the warehouse club just announced. – 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 stock market largely marched in place for much of the session yesterday. However, in the last hour, or so, of trading, the major averages fell rather noticeably, especially the Dow Jones Industrial Average and the Standard and Poor's 500 Index. By the close, the two leading benchmarks were off by 89 points and nine points, respectively. The tech-heavy NASDAQ, meanwhile, held its ground somewhat better closing off by less than eight points.
The apparent impetus for the late selling was less-than-optimistic musings from Senate Majority Leader Harry Reid, who intoned that there had been ``little progress'' made in budget talks aimed at averting the much-talked about and greatly feared fiscal cliff. The White House Press Secretary, however, disputed that negotiations were at an impasse, although it is not hard to fathom that feelings are quite raw following the contentious election.
Meanwhile, the budget, or lack of one, was not all that Wall Street has had on its collective mind. There also is the tenuous situation in the beleaguered euro zone, where that loose economic confederation is attempting to fashion the latest bailout package for debt-encumbered Greece. And at home, the economic reports continue to come in and they are mixed, on average. Specifically, the Conference Board reported yesterday morning that consumer confidence had ticked up in November, coming in a little above expectations. Just before that announcement, the Commerce Department had reported that orders for durable goods, a notoriously volatile series, had come in unchanged in October. A modest decline had been the consensus forecast. That unchanged reading comes after a sharp increase in September and a material setback in August.
Then, there is housing, which continues to recover nicely, with data out yesterday affirming that home prices were continuing to climb. Later on this morning, the Commerce Department will issue metrics on new home sales for October. A slight dip is the general forecast. Meanwhile, there continues to be news from the retail front, and much of that is decent, albeit not exceptional. Specifically, reports suggest that retailers posted solid online sales gains on so-called Cyber Monday, although some estimates note that the growth rate had slowed. This may be an indication that major markdowns, which commenced well before Black Friday, may have led to a greater spacing out of aggregate sales.
As to the stock market, in addition to the leading averages and a more mixed showing on the advance-decline line, we saw a sharp gain in the shares of Ralcorp (RAH), on word that ConAgra Foods (CAG) was making a $90-a-share bid for the rival food producer. Then, after the bell yesterday, coffee maker Green Mountain Coffee (GMCR), which had fallen on hard times earlier this year and seen its stock lose almost 90% of its value, jumped sharply in after-hours trading on word of materially better-than-expected earnings in its latest quarter. That issue, which closed out the session at $28.95 a share, is indicated to open today's trading in less than an hour from now at about $34.50 a share. The stock had earlier this year traded as low as $17.11 a share.
As to the markets, in general, they are posting losses in the equity futures, with the S&P 500 Index futures now lower by more than four points and with the NASDAQ futures in the red by almost nine points. These twin setbacks and an accompanying indicated loss in the Dow futures, follow reversals in Asia overnight and Europe this morning. Our sense is that the U.S. equity market and, by extension, global markets, will remain volatile going into the new year, as Washington likely will go down to the wire before it can fashion a compromise deal on the budget--if it can even then. – Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.