After The Close - There was some profit taking on Wall Street today, the first trading day of the second quarter. The selling was not all that surprising as a stellar first quarter—one that witnessed record highs for both the Dow Jones Industrial Average and S&P 500 Index—had left the U.S. equity market clearly overextended. The bears were also emboldened shortly into the trading session by a weaker-than-expected report on U.S. manufacturing activity (more below). Thus, when all was said and done, the aforementioned indexes were modestly lower, and the losses for the NASDAQ, hurt by a weak showing from technology stocks, were even more pronounced. Overall, declining issues led advancers on both the New York Stock Exchange and the NASDAQ, to the tune of more than two-to-one on both exchanges.

As noted, the day’s big news came in the form of data on the U.S. manufacturing industry. Specifically, the Institute for Supply Management’s March reading on manufacturing activity came in at 51.3, which was lower than February’s figure of 54.2 and the consensus expectation of 54.0. Not surprisingly many of the stocks of the large U.S. industrial manufacturers, including Dow-30 components 3M Company (MMM - Free 3M Stock Report) and Caterpillar (CAT - Free Caterpillar Stock Report), were notably weaker. Overall, the industrial sector was the big laggard on Wall Street, followed by weak showings from the basic materials and technology groups. Another disappointing performance from Apple (AAPL) weighed on the latter area.

The manufacturing report kicked off a busy week for economic news. Also this week, we will receive reports on manufacturing orders and vehicle sales (Tuesday), nonmanufacturing and private sector payroll creation from Automatic Data Processing (ADP) (Wednesday), initial weekly unemployment claims (Thursday), and U.S. employment and the trade gap (Friday).

Elsewhere, Asia’s major indexes were mostly weaker, with a notable 2.1% decline in Japan’s Nikkei. Economic news was also the culprit overseas. Japan’s Tankan Manufacturing Index and the Tankan Nonmanufacturing Index each fell short of expectations. And similar to the U.S., China's Manufacturing PMI was weaker than expected (50.9 versus the expectation of 51.6). Meantime, the European equity markets were closed in observance of Easter Monday. The markets on the Continent will open tomorrow morning, with the euro zone’s sovereign-debt problems still on the minds of investors.

There was also some notable news from Corporate America. Shares of eBay (EBAY) moved higher after the online retailer said that its e-commerce and PayPal businesses should lead to healthy revenue and profit growth in the coming years. Likewise, the stock of California-based Tesla Motors (TSLA) jumped after the automobile maker announced that sales of its Model S sedan have exceeded expectations and raised its first-quarter outlook. There was also some interest in the stock of Molson Coors (TAP) after a major brokerage house said that the alcoholic beverage maker should benefit from increased beer sales as the economy improves. However, the attention shown Molson Coors did not spur any additional buying interest in the stocks of fellow brewers Anheuser-Busch InBev (BUD) and Boston Beer (SAM). -William G. Ferguson

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


12:20 PM EST - The stock market is struggling so far today, after an attempt to push higher earlier this morning. The market is currently off its session lows, however, and it will be important to watch this afternoon’s trading to see if buyers step in and support equities. A pullback here is not totally unexpected, as the S&P 500 Index hit a record high on Thursday. However, that move was not accompanied by a big surge in trading volume, meaning that not everyone was confident in the push higher. It may take a bit longer for investors to get comfortable with equities at these levels, and we may see some further testing of the high ground around 1,570 in the S&P and even a return to the 1,540 level, which corresponds to the low area of the trading range that index had been locked in for a few weeks. Some of the weakness in the market today may also have to do with the fact that this is the first trading day of the second quarter, and certainly the gains logged in the first few months of this year are going to be hard to top.

As we pass the noon hour in New York, the Dow Jones Industrial Average is off 32 points (-0.2%); the S&P 500 Index is lower by eight points (-0.5%); and the tech-heavy NASDAQ is shedding 24 points (-0.7%). Market breadth is unfavorable, with declining stocks outnumbering advancers by roughly 2 to 1 on the NYSE. All of the market sectors are heading lower, with steep losses in the transportation and consumer cyclical names. The utilities are lower, but are holding up better than the other sectors. This likely shows a flight-to-safety mentality emerging. Gold is up a bit, and is near $1,600 an ounce. Also, investors are buying Treasuries. Meanwhile…

Traders probably were not happy with the economic reports released this morning. Specifically, the ISM Manufacturing Index came in at 51.3 for the month of March, which was lower than the 54.2 figure logged in February and also below the consensus view. Elsewhere, construction spending showed some improvement in February. However, this may not be enough to sway investor opinion today.   

In corporate news, Tesla Motors (TSLA) stock is rising, after the alternative car company put out a favorable sales report and lifted its quarterly guidance. Meanwhile traders are, no doubt, looking ahead to the batch of first-quarter earnings reports that will be streaming in over the next few weeks. -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 Corporate news is rather light today, the first day of the second quarter, although there are a few stocks that will likely see active trading. Shares of Tesla Motors (TSLA) are indicating a sharply higher opening today, after the maker of electric cars said that sales of its Model S sedan had been better than expected, prompting the company to increase its guidance. Management now believes it was profitable in the first quarter. Elsewhere, Novartis (NVS) has received an unfavorable ruling from India’s top court, which dismissed the drugmaker’s attempt to win patent protection for its cancer treatment, Gleevec (known as Glivec in some markets). However, the issue is showing just slight weakness in the premarket. – 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 closed a stellar first quarter with a flourish late last week, as the Standard and Poor's 500 Index pushed to an all-time closing high. In doing so, that fairly broad-based composite lifted itself above the closing high of 1,565 set back in October of 2007. Between that date and last Thursday, the stock market had suffered through a horrific bear market and subsequently risen to a succession of record closing peaks on the Dow Jones Industrial Average.

On Thursday, before the start of the long Easter weekend, the S&P 500 and the Dow each set new closing highs, with the Dow adding 52 points, pushing that 30-stock composite up to 14,579. The six-point advance in the S&P 500 Index, meantime, lifted that index up to a record 1,569. The NASDAQ, while still well below its 2000 peak, also did well, gaining 11 points, and bringing that index up to 3,268. For the quarter, the Dow gained 11.3%; the S&P jumped by an even 10.0%; and the NASDAQ rose 8.2%. The big winners, though, were the S&P Mid-cap 400, which added 13.1%, and the small-cap Russell 2000, which rose 12.0%. It was by all accounts a heart-warming three months for the still-ascendant bulls.

Now, a new quarter gets under way, and in addition to the upcoming parade of earnings reports, and the continuing soap opera in Europe, the market will also have to contend with a series of economic reports due out over the next five days, beginning with this morning's key metric on manufacturing activity across the United States. Expectations here are for a slightly slower growth rate of 54.0. In February, the rate was 54.2. Nevertheless, that still would be a decent way to start the new month and quarter. Also due out at that time is the monthly report on construction spending. The manufacturing data, it should be noted, is for March. The construction metric is for February.    

These two reports will then be followed up tomorrow with a survey on factory orders for February, where a gain of 3.0% is expected following a decline in January. Also tomorrow, we will get a look at total vehicle sales for March, where a solid 15.3 million cars and trucks are estimated to have been sold on an annualized basis, the same as in February. Then on Wednesday, we are scheduled to get the monthly survey on non-manufacturing activity. Here, a flattish reading of 55.8 for March versus 56.0 in February is the general forecast. Thursday will then bring weekly data on new jobless claims and continuing claims. All of this is just a prelude, of course, to Friday's scheduled releases on total non-farm payrolls and the jobless rate for March. Expectations are that the nation added 200,000 new positions last month, a fairly strong number, but still down modestly from February's surprisingly strong 236,000 non-farm payrolls. At the same time, the unemployment rate report is forecast to show that it held steady last month at 7.7%.

As to the markets this morning, they are up slightly overseas, where Europe, in general, and Cyprus, in particular, are on the minds of many investors on both sides of the Atlantic.

And on our shores at this hour, the Standard and Poor's 500 Index futures are off by half a point, while the NASDAQ futures are better by two and a half points, presaging a mixed opening when traders get down to business in less than an 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.