Loading...

After The Close - It was a tale of two cities on Wall Street today. The Dow Jones Industrial Average after a slow start managed to turn in a nice showing, with that index up more than 100 points for a good portion of the session. However, the NASDAQ struggled for much of the day, as a weak technology sector weighed on the index. Not surprisingly, advancers led decliners on the Big Board, while the latter held an edge on the NASDAQ. 

Most of the Dow 30 components finished the day in positive territory. Of note were advances in the shares of Caterpillar (CAT - Free Caterpillar Stock Report), Chevron (CVX - Free Chevron Stock Report), Bank of America (BAC - Free Bank of America Stock Report), and Travelers (TRV - Free Travelers Stock Report). Overall, it was a productive day for energy, industrial, and financial stocks. Meantime, Travelers was the biggest gainer in the index of 30 bellwether companies. Shares of the Travelers (up more than 5%) jumped on reports that the insurer’s net loss related to Hurricane Sandy would be in the area of $650 million, which is well below what competitor Allstate (ALL) said it expects to lose on the tragic event. Investors were also happy to learn that Travelers will resume repurchases of its common shares. Conversely, it was not a good day for those long technology stocks. The technology sector was the day’s biggest laggard among the 10 major groups. A $37 drop in the price of Apple (AAPL) stock weighed on the performance of the sector. Apple’s cohort Google (GOOG) also finished the session in the red, albeit modestly.

The day’s economic news made for a mixed bag. On the positive side, was the Institute for Supply Management’s latest report on nonmanufacturing activity, which showed a modest pickup. The services PMI came in at 54.7 in November. Expectations had been that this metric would have eased back to 53.5. The good showing in the services area is welcome news, especially with the holiday shopping season now in high gear. We also received mildly encouraging data on factory orders and productivity. However, the aforementioned data were offset somewhat by a few discouraging reports on the labor market.  Specifically, the ISM’s employment index decreased by 4.6 points, to 50.3 in November, signaling the pace of growth in employment is slowing. This was compounded by a dour report from Automatic Data Processing (ADP) on private-sector job creation.      

Meanwhile, little has changed regarding the looming “fiscal cliff” negotiations, which has seen the opposition parties in Washington hold steadfast to their beliefs on how to tackle the nation’s budgetary problems. President Obama met with a group of corporate heads this morning to discuss the White House’s plan. He once again reiterated that failure to raise taxes on the nation’s wealthiest individuals would be a nonstarter in the negotiations process. He also indicated to Republicans on Capitol Hill that he would refuse to let the tax and spending debates in the "fiscal cliff" talks affect the need to raise the debt ceiling in 2013. The investment community seemed to take some comfort in the latter remarks. One thing that appears to be in vogue lately is that market volatility picks up when comments from political leaders in Washington on the “fiscal cliff” negotiations surface.

Elsewhere, it was a good day for the international markets. All of the major European bourses finished modestly higher, while Asia’s indexes put in a nice performance overnight, led by a 2.2% jump in Hong Kong’s Hang Seng Index. China’s new government’s announcement that its plans to maintain policies intended to strengthen the world's second-largest economy helped raise optimism about global growth. New Communist Party Chief Xi Jinping said increased investment in infrastructure, tax reforms, and giving the market a greater role in setting prices are among his top priorities.

Looking ahead to the rest of this week, the investment community’s attention is likely to remain on the “fiscal cliff” discussions in Washington and a few notable reports on the U.S. labor market. We will get data on weekly unemployment claims tomorrow, followed by the government’s much-anticipated report on nonfarm payrolls on Friday. Will the latter news serve as any kind of impetus for an equity market that has predominately traded sideways for the better part of the last two weeks? That remains to be seen.   - William G. Ferguson  

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

-

12:30 PM EST - The U.S. stock market opened lower this morning, but is now trending nicely higher, on average. At just past noon  in New York, the Dow Jones Industrial Average is up about 117 points ( 0.9%); the S&P 500 Index is up six points (0.4%); but the NASDAQ , which is still quite weak, is lower by nine points (-0.3%). 

Tech giant Apple (AAPL) is seeing its stock slip about 4% today. Notably this market leading issue is off about 21% from its 52-week high of $705, and this is likely weighing down the NASDAQ. Market breadth also indicates a mixed session, as declining and advancing stocks are largely in balance. Some strength can be seen in the energy and financial stocks, but there are sharp losses in the technology and consumer names.

Technically, the S&P continues to show some choppiness, after hitting resistance at its 50-day moving average, located at roughly 1,420, a few days ago. Trading volumes have been somewhat light lately, suggesting that the selling is contained. Also, the fact that bargain hunters have moved in to support equities at times, also indicates that the bulls are committed to the market. Further, the price-to- earnings of the broader market is about 15, which is reasonable, and may also be helping to attract buyers.

The economic news released this morning was mixed. According to ADP, about 118,000 private sector jobs were added to the economy in November, which was down from last month’s figure, and below expectations. This release may have made traders more cautious, as the weekly initial jobless claims are due out tomorrow, and the November employment report is scheduled for Friday. Meanwhile, some better news followed. According to the Department of Commerce, factory orders rose 0.8% in October, which was better than had been widely expected.  Furthermore, the Institute for Supply Management’s non-manufacturing Index came in at 54.7 in November, which also exceeded the consensus view. 

Today’s corporate news was also mixed. Shares of Pandora Media (P) are off sharply, after the digital media company provided a weaker-than-hoped guidance. TIBCO Software (TIBX) stock is lower, after the company issued disappointing preliminary quarterly results. Things were more encouraging in the drug sector. Specifically, Peregrine Pharmaceuticals (PPHM) stock is moving sharply higher after announcing some favorable drug-related news.  - 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 Shares of Pandora Media (P) are plunging in pre-market trading, after the Internet radio operator reported better-than-expected October-period results, but issued forward-looking guidance that fell short of investors’ expectations. An earnings report from beverage and spirits company Brown-Forman (BFB) received a warmer reception, and that stock is up slightly ahead of the bell.

In other news, metals and mining company Freeport-McMoRan (FCX) has agreed to acquire Plains Exploration & Production and McMoRan Exploration, two petroleum producing outfits, for $6.9 billion and $3.4 billion, respectively. FCX shares are trading sharply lower in the premarket as a result, however. – 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 meandered about to a mixed-to-slightly-lower close yesterday, which wasn't all that bad given the reality of the budget situation in Washington. In that quarter, there remains a contentious standoff between the two parties over whether the sides can orchestrate a deal that would avoid the so-called fiscal cliff. That unwanted event, which would result in mandatory tax hikes and spending cuts, which could put the economy on a much more shaky path in 2013, is set to kick in without constructive action by the Congress, on January 2nd.

Essentially, the Republicans in Congress want to ensure that any so-called revenue increases would be matched by spending cuts. The White House and Congressional Democrats suggest that they will only agree to the spending reductions with an increase in the tax rates paid by couples earning more than $250,000 a year. This back and forth has been going on for months and a resolution seems nowhere at hand, although the two sides are at least talking and expressing some hope.

Given this backdrop of uncertain fiscal talks, iffy prospects in the euro zone, and dour economic tidings on this side of the Atlantic, which were underscored the day before by the issuance of data showing that manufacturing activity had contracted slightly in November, the essentially mixed tone of the market yesterday was something of a relief. Specifically, the Dow Jones Industrial Average shed 14 points on the day; the Standard and Poor's 500 Index lost two points; and the tech-heavy NASDAQ fell six points. As if to underscore the essentially mixed tone of the trading day, there were just nominally more losing issues than winning stocks on both the Big Board and the NASDAQ. New highs eclipsed new lows on the NYSE, but losers held sway on the NASDAQ, if just slightly.

This unprepossessing performance came on a light news day, in which the focus was mainly on the static situation in Washington. In response to the looming fiscal cliff, and the likelihood of higher taxes on dividends paid in 2013, some companies are now increasing their payouts, announcing one-time payments to be disbursed this year, or accelerating payments due in 2013 into the waning days of 2012. One well-known company in this latter camp is Campbell Soup (CPB). The iconic food processing giant yesterday voted to accelerate its dividend payment to later this year. Other companies are likely to press forward in similar fashion over the closing days of this month.

As to other news, the economic beat will pick up later this morning when the Institute for Supply Management, the trade group that on Monday issued the disconcerting report on manufacturing, is set to release the companion report on nonmanufacturing activity. That metric, which chronicles activity in the critical services sector, is expected to show a further expansion in November, albeit at a lesser rate than in October. Uncertainty among both business executives and consumers are behind the likely deceleration in growth in this category. And the impetus for such a slowing in growth appears to be according to most pundits, the uncertainty raised by the goings on in Washington.

Elsewhere, China, saw its stock market jump 3% overnight, as that fast-growing nation pledged increasing economic reforms. Its new leadership is going down a familiar road, however, and hopes have been dashed along this path before. In any event, these pledges and the anticipation of faster GDP growth over there were welcomed by the markets worldwide. Moreover, that positive sentiment appears to be having a somewhat curative effect on our shores, albeit a much lesser one, as the equity futures in our country are indicating a modestly higher opening for the market when trading gets going 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.