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After The Close - A strong week for equities ended on a somewhat weaker note, as renewed concerns about the euro zone, at least early in the day, (more below) and mostly disconcerting data on the U.S. economy combined to briefly embolden the bears, who otherwise did not have a good week. Still, the major equity indexes were able to pare a significant portion of their earlier losses by the closing bell, and thus the setbacks for the NASDAQ, and the S&P 500 Index were modest. The Dow, with a late push, closed essentially unchanged.

Investors should take note that the recent move higher by the major U.S. indexes may not be as formidable as it appears, as it has come on rather low volume during most of April’s trading sessions. The subpar trading volume may also be a sign that investors are a bit hesitant to make large moves with the market clearly overextended and before the first-quarter earnings reports begin to pour in en masse. Speaking of earnings, shares of both JPMorgan Chase (JPM - Free JPMorgan Stock Report) and Wells Fargo (WFC) were lower after the banks reported mixed results. JPMorgan posted a decline in revenues, while Wells Fargo said that home loans volume dipped last quarter. Likewise, shares of Infosys (INFY) fell on a dour outlook for the IT services company

As noted, today’s economic news was mostly disappointing. The headline report came before the start of trading on these shores. Specifically, March retail sales, which were generally forecast to have flattened out last month, instead fell by a fairly sharp 0.4%. Likewise, the Thompson Reuters/University of Michigan consumer sentiment survey fell to 72.3 in the preliminary reading for April, down from 78.6 last month. It marked the lowest reading in nine months and, along with the weak retail sales data, is another indication that the consumer, who accounts for nearly two-thirds of the nation’s economic output, is more pessimistic about the state of the economy and their long-term outlook. In a bit of a surprise, the consumer cyclical stocks actually fared pretty well in the latest session, relative to the other major groups. Perhaps, producer price data showing that inflation remained benign last month helped. However, the other sectors most closely tied to the health of the economy—most notably the basic materials, industrial, energy, and financials groups—were the day’s biggest laggards.

Elsewhere, it was a difficult conclusion to the trading week on the Continent, with most of the European bourses, including Germany’s DAX and France’s CAC-40, finishing sharply lower. The primary culprit behind the selloff was renewed concerns about the bailout loan for Cyprus. However, following the conclusion of trading there, reports surfaced that euro-zone finance ministers have backed a 10 billion euro bailout for Cyprus and the European Commission said it would try to help the nation’s economy grow again with better use of European Union structural funds. The support of the commission clears the way for several euro-zone nations, including Germany, to seek approval for the three-year bailout in national parliaments, so that loan agreements can be signed by April 24th. These developments seemed to ease concerns about the struggling nation and had a positive effect on trading over here. The news surfaced too late in the day to affect trading on the European bourses, though.

The weak economic news on these shores hurt the commodities markets today, as well. Prices of the two most closely tracked commodities, oil and gold, tumbled. In addition to the macroeconomic concerns, crude oil prices were hurt by yesterday’s data showing a jump in supplies, while the tame inflationary environment is not a good scenario for the precious metals. The sharp decline in gold prices weighed heavily on the stocks of the gold and mining companies during today’s session. Shares of Goldcorp (GG), Barrick Gold (ABX), and Newmont Mining (NEM), among others, were notable decliners in the metals and mining sectors.

Looking ahead to next week, there will no shortage of economic or earnings news. On the economic front, we will receive reports on consumer prices, housing starts and building permits, industrial production, and the latest Federal Reserve Beige Book summation of economic conditions. At the same time, the earnings reports will begin to pour in, led by results from 11 Dow-30 companies. The blue-chip companies did very well this week, and these earnings reports will likely play a big role in whether this trend will continue next week. In addition to the Dow-30 news, we will get the latest quarterly results from tech-behemoth Google (GOOG).   - William G. Ferguson

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

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12:15 PM EDT - The stock market put in a weak performance this morning, but is now making an attempt to find some support as we pass the noon hour in New York. It remains to be seen if bargain hunters will move in later in the day, or if the market will turn notably lower. The Dow Jones Industrial Average is off 35 points (-0.2%); the S&P 500 Index is lower by 17 points (-0.5%); and the tech-laden NASDAQ is shedding nine points (-0.6%). Market breadth is negative, with declining stocks ahead of advancers by over 2 to 1 on the NYSE.  Technically, the S&P 500 Index has run up for four consecutive days. Consequently, the market likely became “overbought” and a pullback here is not unexpected. 

All of the market sectors are in negative territory. There is considerable weakness in the basic materials issues, with losses in the miners. Notably, the price of gold is off 4%, to $1,501 an ounce. The energy names are also weak, led lower by the oilfield services issues. This may reflect the fact that oil is lower by 3% at $90.62 a barrel. The healthcare stocks are holding up a bit better than the broader market, with gains in some biotech and drug stocks. The utility issues, which are defensive and offer large dividend yields, are also showing some relative strength.

The economic news released this morning did little to encourage traders, and likely contributed to the selling this morning. Specifically, retail sales dropped 0.4% in the month of March, falling well short of expectations. Also, the University of Michigan’s Consumer Sentiment Index provided a preliminary reading of 72.3 for the month of April. Analysts had been looking for a much higher figure. For comparison, last month’s reading was 78.6. These reports may have some investors concerned that the consumer is losing steam. Notably, the consumer stocks have been driving the market lately, while basic materials and technology have lagged.

In corporate news, shares of JPMorgan Chase (JPM Free JPMorgan Stock Report) are lower, even though the banking giant posted strong profits. Investors may be concerned about the top line. Also in the financial sector, Wells Fargo (WFC) put out decent results, but that stock is trading lower, too. Earnings season will start to pick up in the coming weeks, and this will likely play a crucial role in the market’s direction.  - 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 Financial stocks are in the headlines today, as two of the nation’s largest banks, JPMorgan Chase (JPMFree JPMorgan Stock Report) and Wells Fargo (WFC) reported first-quarter results this morning. Both institutions delivered strong earnings, but investors appeared to take issue with some of the banks’ underlying metrics, such as net interest margin, and have bid the two stocks lower in the premarket. Also on the earnings front, shares of Infosys (INFY) are plunging ahead of the bell, after the India-based information technology services company released disappointing March-period financials. That news appears to be weighing on the stock of industry peer Cognizant Technology Solutions (CTSH), as well. Finally, shares of trucking company J.B. Hunt Transport Services (JBHT) are indicating a modestly lower opening on earnings news. – 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 bulls continued their march to new high ground yesterday, as the Dow Jones Industrial Average jumped 63 points, putting that index within 135 points of 15,000, while the Standard and Poor's 500 Index gained six points. That index is now within a like amount of points of 1,600. Finally, the NASDAQ, feeling some pressure on multiple fronts, still managed a slight gain of three points. Still, that nominal gain was enough to lift this index to just over 3,300. It was that sort of a day.

For now, many bears keep on insisting that the stock market has moved too far, too fast, and that some sort of correction, or worse, is in the offing, and perhaps very soon. Terms such as profit taking, pause, correction, downturn, and so on, are being heard with increasing frequency. And there may well be some merit to such suggestions. But the time for a notable down move does not appear to be at hand just yet.

Meanwhile, the stock market got a notable lift about an hour before the start of the trading day when the U.S. Labor Department reported that weekly jobless claims had dropped sharply, falling from an upwardly revised 388,000 the week before to 346,000 over the latest seven-day stretch. That was a much larger decline than had been forecast, and served to take some of the sting out of last Friday's weak employment report for March.

Of course, there is increasing noise being made about a slowing or sluggish economy in the current quarter. Here, too, there is likely to be some truth in such a suggestion. In fact, following what we believe was a stronger first-quarter performance by the domestic economy, in which GDP growth may well have approached 3%, the outlook is now somewhat dimmer for the second three months, as we would expect growth to struggle to even reach 2%. Behind such caution is a series of reports in which we have seen slowing rates of improvement in manufacturing activity, non-manufacturing, and employment--and now retail sales (see below).

The good news is that such moderating gains, while probably not enough to reverse the long-standing climb in corporate earnings, may well be sufficient to encourage the Federal Reserve to continue its policy of monetary accommodation. And it is that easy money policy that has long had a curative effect on our stock market.

As to the economy and the issuance of major reports, we have just had a pair of such releases, with the Commerce Department reporting that retail sales fell by 0.4% in March. That was a materially worse performance than the unchanged reading that had been generally forecast. At the same time, the Labor Department reported a sharp drop in producer prices, with the headline number, which includes all variables, falling by 0.6%. The core reading, which excludes food and energy, gained a mere 0.2%, or in line with expectations.

But the weak retail sales report is sobering, and could well suggest that the first quarter, albeit a decent one for growth, may well have concluded on a soft note, which might well continue in the current three months.

As for the market, the futures are selling off on the retail sales news, and indications are that some overdue profit taking could be in the offing at the start of the trading day, which will get under way 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.