Loading...
 

After the Close - The major U.S. equity indexes traded in a tight band around the neutral line for much of today’s session. The lack of any major news on the economy or on the earnings front did not give investors much to run with in either direction. The market started the day in mixed fashion, moved lower during the morning hours before turning positive early in second half of the session and then building on modest gains to the closing bell. The Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index were modestly higher, with the NASDAQ overcoming some early weakness in the technology space. Overall, advancing issues led decliners on both the Big Board and the NASDAQ, with a notable surge of buying on the latter exchange in the afternoon hours.

A glance at the 10 major sectors showed that nearly all of the groups finished in positive territory, with some leadership coming from the consumer discretionary and consumer staples stocks. Within the consumer cyclical space, shares of the gaming companies were notably higher, while the staples category was led by tobacco and nonalcoholic beverage stocks. Meanwhile, technology was able to overcome a subpar showing from the stocks of the IT services companies and weakness in the shares of Google (GOOG) to post a modest gain. Semiconductor stocks fared well today.

As noted, it was a very quiet day on the economic and earnings fronts and for the former it will remain that way until this Friday, when we receive data on producer prices and retail sales. Meantime, investors will be turning their attention to the earnings calendar shortly, as Alcoa (AA Free Alcoa Stock Report) is set to kick off the first-quarter earnings season after today’s close with its latest quarterly results. The consensus is that the coming earnings season will bring decent results from Corporate America.

It was also a nondescript day of trading on the Continent. The major European bourses did not stray far from the breakeven mark in the latest session.  In the euro zone, economic data was limited, with the most important report coming from Germany. Specifically, we learned that industrial production rose 0.5% in Germany last month, following February's decline of 0.6%. Some other notable news from Europe included Portugal's constitutional court ruling that some of the European Union-imposed austerity measures are unconstitutional and Italy's Pier Luigi Bersani, head of the centre-left Democratic party refused a coalition with Silvio Berlusconi's centre-right party. However, Pier Luigi Bersani indicated he would not stand in the way of forming a new government. Meanwhile, Asia’s major indexes were weaker, as bird flu concerns and tensions with North Korea intensified.  With regards to the former, more than 20 people have contracted bird flu in Asia in recent weeks.  - 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 EDT - The stock market put in a weak session this morning. However, as we pass the noon hour in New York, the major averages are coming off their session lows. The Dow Jones Industrial Average is down 55 points (-0.4%); the S&P 500 Index is lower by two points (-0.1%); and the tech-laden NASDAQ is down just four points (-0.1%). Market breadth suggests a mixed tone to the market, as declining stocks are about even with advancers on the NYSE. The major market sectors are also divided. Strength can be found in the consumer names and the high-yielding utility issues, but there is weakness in the conglomerates, the financials, and the basic material issues.

Technically, the S&P 500 Index, after attempting to move into record territory several days ago, has run into some resistance. This is not surprising, as “bullish sentiment” had become extreme, with readings on the VIX under 12. Further, renewed concerns about the situation in Europe, lackluster economic reports at home, and the upcoming earnings season, all probably put traders on the defensive. Recently, trading volumes have been elevated on days when the market has declined. However, we have not seen any dramatic selloffs, and there has been little panic selling, suggesting that a larger correction is not at hand. Further, it should be noted that we have seen bargain hunters move in to support equities at opportune times, and that suggests that the bulls are still committed.

There were no economic reports released today. This too may have created an information vacuum, doing little to assure traders. Tomorrow is a light day for news, as well, but we will get a look at wholesale inventories for February.

Meanwhile, traders are likely looking ahead to the first big profit report of the first-quarter earnings season. Specifically, Dow component, and basic materials giant, Alcoa (AA - Free Alcoa Stock Report) is slated to put out its figures after the market closes today. That stock is trading unchanged now, after a slight gain earlier. Elsewhere in corporate news, Lufkin Industries (LUFK) shares are rising sharply on news that the company will be acquired by General Electric (GE - Free General Electric Stock Report). Notably, shares of General Electric are off a bit, as it is the acquiring company, and will be financing the deal. Also, Avon Products (AVP) stock is up slightly, after that company provided further details of its cost savings plan. - Adam Rosner

At the time of this article's writing, the author had a position in AA.

-

Stocks to Watch from The Survey – First-quarter earnings season kicks off later today, as aluminum producer Alcoa (AAFree Alcoa Stock Report) is scheduled to release March-period results after the market closes. Overall, though, corporate news is rather light ahead of the bell. Still, there are some companies making headlines this morning. Cosmetics retailer Avon Products (AVP) said that it will cut roughly 400 jobs as part of its previously announced plans to reduce costs by $400 million. Elsewhere, aerospace company Boeing (BAFree Boeing Stock Report) has finished testing a redesigned battery for its 787 Dreamliner, moving the company closer to getting the grounded plane back in the air. Finally, shares of Central European Distribution (CEDC) are plunging in the premarket, after the beleaguered producer and distributor of alcoholic beverages commenced voluntary Chapter 11 bankruptcy proceedings over the weekend. – 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 - A dour employment report from the Labor Department temporarily brought a halt to the long-running advance by the bulls, with that metric unleashing a torrent of selling in the first hour, or so, last Friday.

However, after traders and investors had adequate time to look over the report and weigh its significance, the bulls pushed back, so that by the day's end, the losses were rather well contained.

All told, the Dow Jones Industrial Average, which had been off by more than 170 points at the session's nadir, battled almost all the way back to end the session off by just 41 points. The Standard and Poor's 500 Index was lower by mere seven points, while the tech-heavy NASDAQ was off by a somewhat more substantial 21 points. Encouragingly, the small- and mid-cap indexes did a bit better, but, overall, the direction of the day was down, albeit not dramatically so by the close.

The impetus for this early selling was a report by Labor showing that the nation had added only 88,000 jobs in March, less than half the 200,000 increase generally forecast. That disappointing result, added to less-than-compelling figures issued earlier in the week on manufacturing and non-manufacturing activity, gave the bears some encouragement to lighten their equity positions on Friday.

These numbers, all covering the month of March, have served to shake the evolving confidence in our economy. Our sense, for now, is that following what may well have been a noteworthy recovery in GDP growth in the first quarter, that our economy could take a step back during the April-to-June period. To wit, following what we now suspect was growth of close to 3% in the opening period, that the second quarter gain in GDP may be closer to 1%-2%.

Of course, such a possible reduction in growth does have a bullish side attached to it, as the Federal Reserve could well keep its bond-buying program in place for longer than would otherwise be the case. And it has been an accommodative Fed, more than anything else, we suspect, that has helped to underpin the long-running bull market so far this year.

Meanwhile, another rite of passage is about to get under way, and that is the latest quarterly earnings parade, which will start out this afternoon when aluminum maker Alcoa (AAFree Alcoa Stock Report) will issue its opening-quarter results after the market closes. Estimates for the giant metals player have been coming down, and consensus forecasts have the company netting just eight cents a share for the latest period.

The earnings parade will, in fact, get under way very slowly this week, but next week the pace of such reports will quicken materially. As to the economy in the days ahead, that calendar will be light as well, with just data on jobless claims out on Thursday, and reports on producer prices, retail sales, and consumer sentiment due on Friday.

With earnings news sparse, and economic data likewise limited until late in the week, the focus could well be on events overseas, where Cyprus is again in the news, with indications that this financially challenged nation is now heading toward a euro-zone exit.

However, that possibility is not shaking up the markets as yet, as the European bourses are generally higher this morning, following a mixed session overnight in Asia, and before a presumptive moderately higher opening on our shores 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.