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After the Close - Wall Street still seemed to be in a holiday mood today, after being closed on Monday for Presidents’ Day. Despite the looming $1.2 trillion in government spending reductions set to kick in at the end of next week, on March 1st, and take effect over the next ten years, investors were undeterred and pushed the major market averages higher.

At the close, the Dow Jones Industrial Average was up 54 points, retaking the 14,000 level, and the NASDAQ was in the plus column by 22 points. Market breadth affirmed the positive feelings, with more than two stocks rising for every one falling on the New York Stock Exchange.
Traders may have been encouraged to look past the damage the scheduled spending cuts could cause the economy when President Obama urged Congress today to find a way to avoid the heavy-handed nature of the budget tightening. There is also a feeling by some that even if the cuts are enacted, they might be rescinded shortly thereafter when their weight starts to be felt.

Optimism about mergers was another factor lifting spirits this session. The acquisition of H.J. Heinz (HNZ) by Berkshire Hathaway (BRK/B), announced last week, has boosted sentiment toward consumer staples stocks, which were among the day’s biggest gainers. Shares of Procter & Gamble (PG – Free P&G Stock Report) and PepsiCo (PEP) rose nicely as a result. Pepsi is also enjoying some follow-through momentum from an upbeat earnings report last week.

Meanwhile, talk of a merger between Office Depot (ODP) and Office Max (OMX) lifted the shares of those once more prominent office-supply companies.

Elsewhere among the various sectors, there was a broad push higher, except for some weakness in gold shares, which were hurt by lower gold prices.

Financial stocks, including Bank of America (BAC Free BofA Stock Report) and JPMorgan Chase (JPM Free JPMorgan Stock Report) continued their comeback. The financial sector was a strong performer in 2012, and indications that Europe has stabilized have lifted some of the concerns that banks would be hurt by contagion from across the Atlantic.

Shares of industrial companies, such as General Electric (GE Free GE Stock Report) and 3M (MMM Free 3M Stock Report) turned in a good showing, as well.

On the downside, shares of PetSmart (PETM) and Ulta Salon (ULTA) fell.

Tomorrow brings a handful of earnings reports from some energy companies, including Devon Energy (DVN), where generally lower profits are expected, owing to weak natural gas prices.

But investors may place more weight on Wednesday’s batch of economic reports, which include January data on housing starts, building permits, and the Producer Price index. - Robert Mitkowski

At the time of this writing, the author did not have positions in any of the stocks mentioned.       

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12:30 PM EST - The U.S. stock market opened higher this morning, and has been able to hold its gains, so far. At just past noon in New York, the Dow Jones Industrial Average is up 44 points (0.3%). In the large-cap average, shares of Bank of America (BAC - Free Bank of America Stock Report) are advancing, while United Health Group (UNH - Free United Health Group Stock Report) shares are lower. Elsewhere, the broader S&P 500 Index is ahead seven points (0.5%), and the technology-heavy NASDAQ is tacking on nine points (0.3%). Market breadth suggests a positive tone, as advancing stocks are ahead of decliners by about 2 to 1 on the NYSE. Most of the sectors are advancing, with leadership in the conglomerates and consumer non-cyclical issues. However, there is some weakness in the basic materials stocks.

Technically, the S&P 500 Index is gradually drifting higher as it moves to the 1,525 level. While the market has had a strong run, and a pullback may be in order, it seems to be heading higher, nonetheless. The VIX is rising today, suggesting some concern, but this key measure is still at very low levels.

Traders may be excited about some merger and acquisition news. Specifically, shares of Office Depot (ODP) and Office Max (OMX) are both trading higher on reports that the two companies are contemplating a merger. Competitor Staples (SPLS) is also seeing its stock rise, as the move is spreading through the sector. There were also a few earnings releases put out this morning. Today, we heard from Express Scripts (ESRX). That issue is moving higher, after the company put out solid quarterly figures and issued guidance. In the food industry, General Mills (GIS) shares are up mildly, after the cereal maker reiterated its outlook.

Meanwhile investors are not getting much economic news to look at today. Nonetheless, the NAHB Housing Market Index did provide a reading of 46 for February, just a bit lower than economists had expected and slightly lower than last month’s showing. We get a look at further housing market data tomorrow, with the release of the housing starts and building permits figures for January. Given the strides being made in the homebuilding stocks, this will be an important release to watch. We also will get a look at the Producer Price Index, which should give traders some insight into the inflation outlook. - Adam Rosner

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

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Stocks to Watch from The Survey Last week’s M&A frenzy has spilled into this holiday-shortened trading week, as office supply companies OfficeMax (OMX) and Office Depot (ODP) are reportedly in merger discussions. Although neither operator has commented on the rumors, investors have bid both stocks up sharply in pre-market trading, with ODP stock showing more strength. The stock of industry peer Staples (SPLS) is also rallying in the premarket. Elsewhere, shares of health insurers such as Humana (HUM), CIGNA Corp. (CI), and UnitedHealth Group (UNHFree UnitedHealth Stock Report) are indicating notably weaker openings this morning, likely on news that the Centers for Medicare and Medicaid Services has proposed a decrease in Medicare Advantage rates for 2014 that was lower than anticipated.

There is earnings news out as well, and shares of telecommunications company Windstream (WIN) and pharmacy benefit manager Express Scripts (ESRX) are both trading higher ahead of the bell on solid fourth-quarter financials. Conversely, shares of Medtronic (MDT) are indicating a lower opening this morning, after the medical supplies company reported January-period results. – Matthew E. Spencer

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

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Before The Bell - The holiday-shortened trading week begins with the U.S. equity indexes fresh off a very pedestrian showing last week. For the entire five-day stretch, the major U.S. equity indexes did not stray much from the neutral line. The Dow Jones Industrial Average and the NASDAQ were off 0.1%, while the S&P 500 Index finished 0.1% higher. Of note was a 1.0% gain by the Russell 2000 because it showed that while investors have taken a bit of a breather in recent weeks following a strong January for equities, they are still not against adding some risk to their portfolios. 

Year to date, the Dow 30, the tech-heavy NASDAQ, the broader S&P 500 Index, and the small-cap Russell 2000 are up 6.7%, 5.7%, 6.6%, and 8.7%, respectively. Helping equities since the start of the New Year has been fairly supportive quarterly earnings results and some mixed economic news, which, importantly, has included some positive data on the housing, manufacturing, and non-manufacturing (services) sectors. This week we will get data on producer and consumer prices, housing starts, existing home sales, and the leading indicators. 

With earnings season rapidly drawing to a conclusion—only three Dow-30 companies: Hewlett-Packard (HPQFree Hewlett-Packard Stock Report), Home Depot (HDFree Home Depot Stock Report), and Wal-Mart Stores (WMTFree Wal-Mart Stock Report) have yet to report—investors will likely turn their attention to the economy (both here and abroad) and the budget negotiations on Capitol Hill. Our sense is that the spending cut and debt-ceiling debates in Washington will play a major role in what direction the market takes over the next fortnight—the date for a deal to be struck to avoid automatic spending cuts is March 1st. With the market clearly overextended right now—the S&P 500 Volatility Index (or VIX) begins the week at just above 12—any bit of disappointing news, not the least of which would be the budget talks growing contentious between the two parties in Congress, could prompt a mild selloff on Wall Street, at the very least.

Meantime, over the weekend, the meeting of the G20 leaders failed to produce a more aggressive stance on monetary easing, which could intensify the international currency wars—though the financial leaders did promise not to devalue their currencies to boost exports. The acknowledgement by the world leaders comes as the Bank of Japan has been criticized for trying to boost its exports and end deflation on the island nation by devaluing the yen. However, a growing rift among Bank of Japan board members over how to achieve the country’s new 2% inflation target means the central bank's next governors may have to proceed more cautiously than markets expect in jumpstarting the economy. Overnight, the major Asian equity indexes finished lower on these developments.

However, the story today has been different on the Continent where the major European bourses, including Germany’s DAX and France’s CAC-40, are sharply higher. Pushing equities higher there was stronger-than-expected German economic-sentiment data. Specifically, the ZEW Indicator of Economic Sentiment jumped 16.7 points to 48.2 in February. The upbeat reading followed an encouraging January report, when the index rose to the highest level since May 2010. The data are also an indication that Germany’s fourth-quarter GDP contraction was likely a one-time event, and Europe’s largest economy should resume growing in the first quarter of 2013. The health of Germany’s economy will play a key role in the euro zone overcoming the recent sovereign-debt crisis.

With less than an hour to go before trading commences on these shores, our futures are pointing to a higher start for the equity market. Stocks to watch include OfficeMax (OMX) and Office Depot (ODP), as rumors swirl that the two companies are in advanced talks to merge. Notable companies expected to report earnings today include Dell (DELL), Medtronic (MDT), and Herbalife (HLF). – William G. Ferguson

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