After The Close - It was a ho-hum day on Wall Street, with neither the bulls nor the bears able to mount much of a case, as there was little news on either the economic front or regarding the looming fiscal cliff to move the market in either direction. Thus, at the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index were not far removed from the neutral line. There was some notable early weakness in the technology sector, which played a role in why the NASDAQ fared a bit worse than the other two indexes for most of the session, but an announcement in the second half of trading from Netflix (NFLX) and Walt Disney (DIS - Free Disney Stock Report) gave technology stocks a mild shot in the arm and helped pare the losses for the tech-heavy index by the final bell. 

From a sector perspective, other than the aforementioned intra-day performance of the technology group, there was not much to highlight among the 10 major sectors. The industrial and basic materials groups performed solidly, while the utilities area was the biggest laggard.

There was a pickup in earnings news today after a very quiet start to the week yesterday. Shares of discount retailer Big Lots (BIG) and homebuilder Toll Brothers (TOL) moved higher after both companies posted strong quarterly results, while the stocks of auto parts retailers Pep Boys (PBY) and AutoZone (AZO) were off on disappointing earnings news. As noted, another noteworthy item from the corporate world was Netflix’s multi-year premium pay-TV window agreement with Walt Disney. Shares of Netflix jumped on reports of the deal with the iconic entertainment company that will make the online video content provider the exclusive U.S. subscription television service for first-run live-action and animated feature films from The Walt Disney Studios. Disney shares rose slightly. 

Meantime, trading overseas was also uneventful. Specifically, the major European bourses stalled at their recent multi-month highs today. Our sense is that European equity investors are also keeping a close on the U.S. fiscal cliff negotiations, and the lack of any major developments on that front today caused the major European indexes to take a breather, before a possible renewed challenge on technical resistance levels emerges. Technology and energy stocks were the big laggards today on the Continent.

Looking ahead, our sense is that market participation will pick up over the remaining three days of the trading week, as the investment community looks to a number of important reports on the U.S. economy. Tomorrow we will receive data on the nonmanufacturing activity, productivity, factory orders, and private-sector job creation. This comes a few days ahead of the government’s report on nonfarm payrolls and the unemployment rate. But as we have opined here often over the last month, traders are most likely to react most forcefully to news about the ongoing “fiscal cliff” negotiations on Capitol Hill. The latest news from Washington is that President Obama will not agree to a deal to avert the "fiscal cliff" that does not include raising tax rates on the richest Americans. Both political parties appear to be digging in for a month-long battle that may add some volatility to the world equity markets during the final weeks of 2012.   - William G. Ferguson

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


12:15 PM EST - The U.S. stock market is putting in another subpar performance. At just past noon  in New York,  the Dow Jones Industrial Average, which had earlier shown some relative strength, is off five points; the S&P 500 Index is lower by four points; and the tech-heavy NASDAQ , which is the real laggard today, is shedding 16 points (-0.5%). Nonetheless, market breadth suggests a mixed tone to the session, as declining issues are just slightly ahead of advancers on the NYSE. Some strength can be found in the various market sectors. Specifically, the transportation, healthcare, basic materials, and conglomerates are all holding up well. But, there is weakness in the technology stocks.

Technically, the stock market encountered some resistance at its 50-day moving average, located at roughly 1,420, yesterday. Moreover, it does not look like the index will make any meaningful progress breaking through this key area today. Notably, a few attempts may be necessary to move above this area, and pave the way for a move into higher ground. The S&P is now about 4.5% off its 52 week high.  The VIX is up slightly today, but the current reading of about 17, still suggests bullish sentiment.

Meanwhile, there was no major economic news released today, and this may be constraining the market. Tomorrow, things pick up when the Department of Commerce puts out its factory orders report for October.  The Institute for Supply Management’s Non- Manufacturing report for November is also due out.  However, traders may remain tentative for a few days, as the November employment report is due to be released on Friday, and that is potentially a market-moving issuance. Further, adding to the confusion, the politicians in Washington continue to wrangle with the budget plan for the nation. A surprise resolution of that issue could well pave the way for a holiday rally.

Today’s corporate news is likely playing a role in the market’s direction. Shares of Darden Restaurants (DRI) are off sharply, after the company reduced its outlook. Further, AutoZone (AZO) stock is lower, after a mixed quarterly release. Nonetheless, there is some good news. The housing market recovery seems to be intact. Toll Brothers (TOL) put out an encouraging report, but the stock is up just slightly.  - 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 There is a bit of earnings news out today. Winners appear to include homebuilder Toll Brothers (TOL) and discount retailer Big Lots (BIG). Both stocks are trading notably higher in the premarket, as their respective October-period results seemed to please investors. On the other hand, shares of auto parts retailers AutoZone (AZO) and Pep Boys (PBY), along with ski resort operator Vail Resorts (MTN), are all trading lower ahead of the bell on disappointing earnings reports. Similarly, shares of Darden Restaurants (DRI) are indicating a sharply lower opening this morning, after the owner of The Olive Garden, Red Lobster, and other casual dining chains offered updated financial guidance that did not sit well with Wall Street.

In other news, medical supplies company Baxter International (BAX) has agreed to purchase Sweden-based Gambro, a privately held provider of kidney dialysis services, for roughly $4 billion. – 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 - Stocks meandered about yesterday and finally ended the initial session of the week with modest losses. The focus was twofold in the latest session. First, there was the rapidly approaching so-called fiscal cliff, which is a series of mandatory tax hikes and spending cuts that are due to go into effect on January 2nd. Should this unfortunate development not be bypassed with timely action from the White House and Congress, it could push the country back into recession at some point. Second, there is the economy, which is always a focus and yesterday provided more ammunition for the bears as the Institute for Supply Management, the Arizona-based trade group, intoned that manufacturing activity had contracted slightly last month. Indeed, its survey index posted its worst reading in more than three years yesterday.

Not surprisingly, therefore, when a somewhat overbought stock market had ended the day, it was modestly in the red. The initial upturn, meanwhile, had seen the 30-stock Dow Jones Industrial Average rise by better than 60 points. However, as the day wore on, pessimism from Washington increased, and the manufacturing sector took the aforementioned hit, the market's underpinnings gradually weakened. And by the close, the major averages were all down, led by the Dow, which fell by 60 points on the day. The other averages also moved lower, although in modest fashion as well.

Overseas, the news was a little less onerous, as data showed some pickup in China's manufacturing gait, while in Europe, equities were helped by news of Greece's plan to reduce its debt burden. Of course, the euro zone remains a soap opera for investors worldwide. This is a concern of long-standing that is unlikely to go away very soon.

Going forward, we will be getting additional data this week on the state of the economy. Overall, we sense that the messages will be mixed, with Hurricane Sandy continuing to take a toll on November data, as it did with yesterday's manufacturing metrics. As for the rest of the week, we also saw some stronger vehicle sales for November. Here, the storm actually helped, as so many cars were destroyed during that tragic weather event. Then, tomorrow, we are due to get data on non-manufacturing activity. This is the companion report to the manufacturing series issued yesterday by the ISM. Here, we see a further, albeit lesser, rate of expansion to have been enjoyed last month. We also will get reports this week on productivity, initial weekly jobless claims, and on Friday, the Labor Department's report on non-farm payrolls and the unemployment rate.

As for the markets this morning, they have firmed up a bit overseas, after dull sessions yesterday, in spite of lingering concerns about the U.S. budget talks, which seem to be going nowhere. All told, the European bourses were a little higher earlier today, after a mixed session in Asia. And that mixed tone has extended to our shores, where the Standard and Poor's 500 Index has erased earlier gains and is nominally lower with about a half hour to go before the start of the new trading day. The NASDAQ futures, though, are narrowly higher at this hour. As to individual stocks, the shares of Toll Brothers (TOL) are indicated to open somewhat higher on a nice improvement in that homebuilders' bottom line in the latest quarter. – Harvey S. Katz

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