After the Close - The U.S. stock market put in a constructive session today. At the close of the day, the Dow Jones Industrial Average was up 37 points (0.3%); the S&P 500 Index was higher by six points (0.4%); and the NASDAQ advanced 20 points (0.7%). Moreover, market breadth indicated widespread buying of equities, as advancing issues were ahead of decliners by about two to one on the NYSE, with a similarly favorable showing on the NASDAQ. All of market sectors participated in today’s up move. There was strength in the consumer cyclical, basic materials, and financial stocks.  However, there was relative weakness in the energy and utility issues.

Technically, the stock market extended its recent rally attempt today. Notably, the Dow is now above the 13,000 mark, and the NASDAQ is over 3,000, which may be of some “psychological” significance. Elsewhere, the S&P 500 Index is approaching its 50-day moving average located at 1,422. The broad-based index may hit some resistance, assuming its tries to move above this key area. Notably, trading volumes have been a bit light lately, suggesting a tentative tone to the rally. A pick up in volumes would help confirm bullish sentiment. The VIX was down to about 15, which implies that traders are not too apprehensive.

Meanwhile, the economic news was positive, and likely had something to do with the market’s advance. According to the Department of Labor, initial jobless claims for the week ended November 24th came in at 393,000, which was an improvement over the prior weeks’ reading, and just a bit better than expected. Notably, weekly initial claims also came down a bit. Elsewhere, according to the Commerce Department, GDP for the third quarter was revised upward to 2.7% from the initial estimate of 2.0%. Although analysts had been looking for a slightly higher revision, this showing was still encouraging, in our view.  On the housing front, the recovery seems to be intact. Pending home sales for the month of October rose 5.2%, well ahead of expectations. However, the news did not provide much of a bounce to the homebuilders, as a group. Tomorrow, we get a look at personal spending and income for the month of October, and the Chicago Purchasing Managers Index.

Today’s corporate news was mixed, as usual. Shares of Aeropostale (ARO) were off sharply on a more cautious outlook. Upscale jeweler Tiffany (TIF) also saw its stock slip on a weak report. But, Research in Motion (RIMM) shares headed higher on an analysts upgrade.   - Adam Rosner

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


12:30 PM EST - News out of Washington shortly before noontime on the east coast cut short a modest rally today when House Speaker John Boehner reportedly indicated that government budget talks had not made any major progress. Up to that point, hopes for a budget deal to avoid the upcoming fiscal cliff and relatively positive business news regarding the economy had been lifting traders’ spirits, offset to a degree by some disappointing sales reports from retailers.

Just after the noon hour on the East Coast, the major averages are flat to mixed, with Dow Jones Industrial Average down eight points and the NASDAQ higher by a similar amount. However, the market’s underlying tone is still broadly positive, with about 18 stocks rising for every 11 falling on the Big Board.

Wall Street has been practically ignoring recent economic data, owing to its focus on impending tax hikes and government spending cuts which, if enacted, could cause a recession in the first half of 2013. Going into today, the thinking was that an outline of an agreement was taking shape between the political parties in Washington to blunt the potential damage to the economy. But Speaker Boehner’s words suggesting there is a long way to go yet subsequently rattled investors.

Meantime, the nation’s third-quarter GDP was revised nicely higher, although not as much as expected; the week’s initial jobless claims fell below 400,000 after spiking above that mark owing to disruption from Hurricane Sandy; and pending home sales rose 5.2%, suggesting the housing recovery—if uneven at times—remains on track.

On the down side, a number of retailers reported that sales for the early part of November did not live up to expectations—despite record Black Friday sales--mostly as a result of Hurricane Sandy.

Sales at Macy’s (M), Target (TGT), and Nordstrom (JWN) fell slightly, while Kohl’s (KSS) business fell more sharply. Shares of all of these companies are off on the day, with Kohl’s being particularly hard hit. In this same space, the stock of Tiffany and Co. (TIF) also stumbled when the high-end retailer reported disappointing results and reduced its outlook going forward.

Better news was heard from grocery store operator Kroger (KR), which topped analysts’ fiscal third-quarter profit estimates and issued upbeat guidance.

In other markets, oil is up nearly $2 a barrel, to over $88, and the euro is virtually unchanged. 

Heading into afternoon trading, sentiment toward stocks has worsened with the suggestion that budget talks in Washington have temporarily stalled. - Robert Mitkowski

At the time this article was written, the author did not have positions in any of the companies mentioned.


Stocks to Watch from The Survey Retailers continue to dominate the earnings spotlight, though not necessarily in a positive way. Indeed, shares of jeweler Tiffany & Co. (TIF) and teen apparel retailer Aeropostale (ARO) are both trading notably lower in the premarket, after reporting disappointing October-period results and issuing lackluster outlooks. Other retailers, like Macy’s (M), Target (TGT), and Limited Brands (LTD), are seeing their shares slide after reporting November comparable-store sales.

On the other hand, investors appeared pleased with quarterly reports from apparel company Guess Inc. (GES), supermarket operator Kroger Co. (KR), and book seller Barnes & Noble (BKS), as those three issues are all indicating modestly higher openings ahead of the bell. It is worth noting that GES stock’s upward move may be more attributable to the company’s declaration of a $1.20-a-share special dividend than its quarterly results.

In other news, entertainment giant and Dow-30 component Walt Disney (DISFree Disney Stock Report) has increased its annual cash dividend 25%, to $0.75 a share. The stock is up slightly in pre-market trading. – 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 - Even the mere hint that there may be some progress, however tenuous, on the fiscal cliff front can get a rally on Wall Street going again. And that is precisely what happened yesterday. Thus, after some initial selling of equities yesterday morning, with an added leg down after the government reported lackluster news regarding sales of new homes in October, the market turned around. And by the close of trading, the Dow Jones Industrial Average, off by more than 100 points at its nadir, ended the session 107 points to the good, for an intraday turnaround of more than 215 points in that 30-stock index of mostly blue chip companies.

As to the specifics of the rally, it was broadbased, with more than twice as many gaining stocks on the Big Board as losing issues. The ratio on the NASDAQ was almost five to three. In addition to the Dow, the NASDAQ added 24 points, while the Standard and Poor's 500 Index rose by 11 points.

The impetus for the rally were some positive comments about the chances for a deal on the fiscal cliff from both Speaker of the House John Boehner, who intoned that he was optimistic about a deal, and President Obama, who said he was hopeful that the White House and Congress could reach an accommodation by Christmas. Those comments and signs that the Federal Reserve, which issued its Beige Book summary of economic conditions across the United States yesterday afternoon, would continue buying bonds next year, were all the bulls needed to get what could well be the start of a Santa Claus rally on Wall Street under way.

As to the so-called fiscal cliff, our sense is that some hard negotiations and further posturing by politically minded members in Congress lie ahead. There are likely to be days when pessimism rules and sessions where cautious optimism is more in vogue. Those shifts could well produce some further heightened volatility in the equity markets in the weeks ahead. Eventually, we believe, some deal will be forthcoming, but not easily and perhaps after the deadline of January 2, 2013 passes.

In addition to the latest goings on along our shores, there is the soap opera in Europe to contend with. The latest drama over there involves Greece, which is seeking additional bailout funds as it tries to convince skeptical creditors across the rest of the euro zone that it is worthy of such considerations. In recent days, the bulls have been in charge on the Continent, but often with a struggle.

As to the day ahead, the two sides in Congress are still talking, which is encouraging, but some contend there has been insufficient progress in that deliberative body to really get the ball rolling. As to other news, the markets are up this morning in both Asia, where the Nikkei and the Hang Seng were both nicely higher, and in Europe, where the principal equity averages are in the black by close to a full percentage point. And over here, the futures are nicely higher, with the Standard and Poor's 500 Index futures ahead by some seven points, while the NASDAQ futures are better by 17 points.

Finally, there is the economy, where we have just seen data put out showing an upward revision in third-quarter gross domestic product. Initially, that closely watched metric had suggested a gain of 2.0%. The second look at that figure shows that the presumptive increase was 2.7%. That is probably twice what the uptick will be in the current period, however. Also, data just out showed that weekly jobless claims had come in at 393,000 in the latest seven-day stretch. That was nominally above the 390,000 expectation. – Harvey S. Katz

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