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After The Close - Stocks turned in another volatile session today, continuing the pattern that began yesterday on concerns that central bank liquidity might soon be less abundant. Traders had a tougher time than usual deciphering the Federal Reserve’s intentions regarding its bond-buying program on Wednesday and, fearing the worst, sold stocks aggressively for the first time in a while.

It is no secret, though, that a number of Wall Street professionals had been waiting for a reason to sell. Coming into today, most of the major market indexes had turned in mid-double-digit percentage point gains for the year, after not even five months, typified by the Dow Jones Industrial Average’s 17% advance. So, the thinking goes, a correction might be in order, to consolidate the gains and provide the pause that refreshes for the market to subsequently resume its advance.

As usual, too, concerns about the economy are on the front burner for investors. In that regard, it doesn’t take much for the glass to appear half-empty with the world’s largest economic block, the European Union, largely in recession, uneven growth in the United States, and the pace of business activity easing in China.

As it turned out, though, some upbeat news on housing and employment on these shores helped to underpin the markets today. Stocks ultimately narrowed by a considerable margin the steep losses registered soon after the opening bell. By the end of the day, the Dow was down a modest 13 points, helped by a strong showing in Hewlett-Packard (HPQ - Free Hewlett-Packard Stock Report), while the NASDAQ was off four points. However, the broader market did show some weakness, with the number of decliners widely outnumbering advancing issues on the New York Stock Exchange. The number of stocks hitting fresh 52-week highs also fell sharply.

In corporate news, shares of rue21 (RUE) soared after the specialty retailer accepted a $42-a-share buyout offer. The stock of discounter Dollar Tree (DLTR) also fared well following upbeat earnings news.

Tomorrow brings the final day of trading ahead of the Memorial Day holiday weekend. Business news is due to include a report on durable goods orders for April, where a modest rise is projected, and an earnings release from Foot Locker (FL). The retailer is expected to show a nice profit gain, versus the prior year. Stocks will be open normal hours, but the bond market will close early ahead of the holiday.   - Robert Mitkowski

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

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12:30 PM EDT - The stock market has certainly had a see-saw performance so far today. To wit, stocks opened sharply lower, but have now turned mixed. At just past noon in New York, the Dow Jones Industrial Average is up 17 points (0.1%); the broader S&P 500 Index is lower by about three points (-0.2%); and the tech-heavy NASDAQ is down two points (-0.1%). The market as a whole is still somewhat weak, as declining issues are outnumbering advancers by 2 to 1 on the NYSE. However, the figures are better on the NASDAQ. Most of the market sectors are in negative territory, though, with weakness in the consumer cyclical stocks of note. There are also sharp losses in the utility sector. In contrast, the technology stocks and shares of capital goods companies are holding up a bit better.

Technically, the S&P 500 Index has logged an impressive run for the fast several weeks. Moreover, this has happened through much of May, a month many traders associate with market corrections. As a result, the market may have become “overbought” by some measures. Notably, the VIX has been stuck at low levels for some time. Meanwhile, yesterday some possible weakness could be seen emerging in the market. After looking to move higher early, the averages declined in the afternoon. Further, trading volumes yesterday were considerable, indicating that the move may warrant closer consideration. Today, the market is looking for direction, and traders’ behavior later in the session will be crucial.

Earlier this morning, investors were likely taking their cue from the situation overseas. In Asia, Japan’s Nikkei plunged roughly 7% overnight. Further, stocks in China were weak, after that country posted a weaker-than-anticipated manufacturing report. On our shores, the news has been a bit better and that may have helped prevent a sharper selloff. Initial jobless claims for the most recent week came in at 340,000, which was lower than expected and also back below the critical 350,000 mark. Further, new home sales for the month of April rose to 454,000 units annualized, which also shows progress.

There were a few notable corporate reports today. In the Dow, Hewlett-Packard (HPQ - Free HP Stock Report) shares are trading higher after the technology giant posted decent quarterly profits and issued encouraging guidance. Meanwhile, DryShips (DRYS) stock is headed lower after the shipping giant posted results that more or less matched expectations. -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 April-quarter earnings reports are still coming in, and Dow-30 component Hewlett-Packard (HPQFree Hewlett-Packard Stock Report) is in the spotlight. The technology heavyweight impressed investors with its recent results and outlook, and its stock is trading sharply higher in a decidedly weaker premarket as a result. Other stocks bucking the down trend and indicating higher openings on earnings news include retailers PetSmart (PETM), GameStop (GME), Dollar Tree (DLTR), and Children’s Place (PLCE). Staying in retail, the stock of rue21 (RUE) is surging ahead of the bell, after the seller of clothing for young men and women reported earnings and agreed to be acquired by private-equity firm Apax Partners for $42 a share in cash.

On the other hand, shares of apparel and accessories retailers Buckle (BKE) and Ralph Lauren (RL) and meat and packaged foods company Hormel (HRL) are moving lower in the premarket, as investors were not impressed with their financials. – 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 - It was a ride full of gyrations on Wall Street yesterday, even by the standards of a stock market that has at times, in recent months, traced a most frenetic path. Specifically, after the market opened grudgingly to the upside, the rally then seemed to take on a life of its own after Federal Reserve Chairman Ben S. Bernanke initially started out by telling Congress that the U.S. job market remained too weak for the central bank to quickly abandon its extraordinary stimulus program, the centerpiece of which is its bond-buying efforts. The Chairman's acknowledgement that we still had a ways to go on the economic front before the bank would shift course seemed to embolden the bulls at first.

Indeed, minutes after the Fed Chairman gave his testimony to Congress, the market rallied strongly, with the Dow Jones Industrial Average quickly climbing to a gain of more than 150 points. However, calmer heads soon prevailed, and the market began to pull back. In fact, the Dow shaved a hundred points, or so, off of that early advance within minutes, before that index regained some of its balance, and stocks began to rise again, although not back to their intraday highs.

Then early in the afternoon, some reassessing of Mr. Bernanke's testimony began to make the rounds, especially as he went on to suggest that the Fed could decide to scale back on the pace of its bond purchases as early as its June FOMC meeting. Some on the Fed have already expressed such a desire.

When those comments came out, and after the afternoon's release of the minutes from the last FOMC meeting, in which some of the respective District Presidents had advocated just such a tapering off in bond purchases, the stock market began a sharp retreat in the late afternoon. At one point, the earlier 150-point plus advance in the Dow had become a 125-point, or so, decline, for a peak to trough swing of almost 300 points.

All told, the Dow ended the session off by 80 points; the Standard and Poor's 500 Index shed 14 points; and the tech-heavy NASDAQ, a proportionately larger decliner, lost 39 points., The small- and mid-cap indexes, most prominently, the S&P Mid-Cap 400, dropped more than 21 points, or 1.7%, making it one of the largest losers on the day. Yesterday's action points up the potential vulnerability of the market to troubling news from the Fed. We caution that such tidings are growing ever-more likely as the months of continued asset purchases without let up drone on. However, of note, fed Chairman Bernanke seemingly remains among those Fed members most committed to keeping current aggressive policies intact.

The fireworks from the Fed all but pushed aside some less-than-welcoming profit reports from a number of big retailers yesterday, as well as modestly reassuring news from the National Association of Realtors, a trade group, which reported that sales of existing homes had ticked up slightly last month, to an annual run rate of just under five million homes.

Overall, it was a volatile day even by recent market standards. Our sense is that the lead bank is not yet ready to abandon its asset buying, but at the very least the seeds for such preemptive action have been planted. This suggestion, meantime, could get more credence as the year rolls on, especially if the jobless rate, at 7.5%, were to decline further over the summer and into the fall.

As to the day ahead, stocks in Asia plunged overnight, most notably in Japan, on reaction to the reversal in our country and to news that manufacturing activity had fallen in China in May for the first time since last October.

As to our futures, they are plunging along a broad front, with the S&P 500 Index futures off by 15 points and the NASDAQ futures lower by some 28 points. One winner, in a relatively small pool of stronger equities this morning, is likely to be Hewlett-Packard (HPQFree Hewlett-Packard Stock Report), the computer-making giant and Dow-30 component, which reported lower sales and earnings in the latest quarter, but received the thumbs up in the after-market on the apparent success of some of its cost-cutting initiatives. Also sharply lower this morning are commodities, which have fallen to a one-week low on the dour news out of China. – Harvey S. Katz

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