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After The Close - Volatility was once again the name of the game on Wall Street. Much like several of the prior trading sessions, investors were again taken on a rollercoaster ride, with the twists and turns rather pronounced at different stretches of the trading day. After starting out to the upside on the heels of yesterday’s late-day rally for equities, the major U.S. equity indexes reversed course shortly thereafter, and then selling intensified in the second half of the session only to once again see a half-hearted pickup in buying in the final hour to pare the losses somewhat. At the closing bell, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index were down 77, 20, and nine points, respectively. The proportionately bigger declines in the small-cap Russell 2000 and S&P Mid-Cap 400 Index also suggest that investors are growing more apprehensive about an equity market that has clearly gotten ahead of itself this year, with the Dow 30 and the S&P 500 at one point setting new highs on a daily basis.

Overall, declining issues held a sizable lead over advancers on both the New York Stock Exchange and the NASDAQ, to the tune of around two-to-one on both exchanges. It also should be noted that the ratio of rising stocks to declining issues (known as market breadth) has weakened considerably in recent weeks. Such a scenario usually precedes an extended period of volatility—if not some extended profit taking.

Not surprisingly, demand for fixed-income securities picked up considerably in the second half of today’s trading session. The yield on the 10-year Treasury note, which moves in the opposite direction to the price, firmed a bit once again near the close. Given today’s volatile, the recent jump in Treasury yields and coinciding lift in corporate-bond rates raise questions about whether the advance led by dividend-oriented stocks has run out of steam.

From a sector perspective, it was mostly a sea of red ink among the 10 major groups, save for some late-day interest in the defensive-oriented areas. The stocks most closely tied to the performance of the global economies (i.e., basic materials, energy, industrials, and consumer discretionary) suffered the biggest losses. Within the basic materials space, the construction materials issues and the precious metals and minerals stocks were deep in negative territory. Overall, there were few places for investors to hide today.

Meantime, except for this morning’s report on the international trade gap, which showed a widening in the nation's international trade imbalance, it was a quiet day both the economic and earnings fronts. Our sense is that the lack of any major attention grabbers had investors once again contemplating what the Federal Reserve’s next move with regards to monetary policy will be. Just the thought of the lead bank stepping on the monetary brakes has prompted selling in recent days. Investors should be aware that the release of the Federal Reserve’s Beige Book summation of economic conditions at 2:00 P.M. (EDT) tomorrow could provide further insight into what the central bank is thinking ahead of this month’s two-day FOMC meeting, scheduled to begin on June 18th.  

In addition to the aforementioned news from the Fed, tomorrow will bring data on nonmanufacturing activity and the latest monthly report on private-sector payroll creation from Automatic Data Processing (ADP). The latter report may be more closely watched then normal given that the state of the labor market will play a big role in whether the Federal Reserve begins to ease up on its easy monetary policies. Some traders may view the ADP report as the precursor to the much anticipated report on nonfarm payrolls due this Friday—though this has not always be the case in the past. Friday’s report on employment and unemployment could prove to game changer and may well push the equity market forcefully in either direction given the recent heightened volatility on Wall Street.   - 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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12:30 PM EDT - The stock market is meandering through another volatile session today. Notably, we have seen some choppy trading lately, with the major averages often starting out in one direction, only to reverse course later. For example, yesterday, the NASDAQ fell sharply at first, but then managed to change course and advance at the end of the session. Further, lately we have seen a series of alternating sessions where the market has closed higher one day, only to close lower the next. This type of activity likely suggests that traders remain somewhat divided, and are looking for direction. Technically, the S&P 500 Index was pushed below the 1,650 area a few sessions ago, and earlier today the bulls struggled to take back that level. Much will depend on the traders' behavior later today, and we will have to see if the bargain hunters and committed bulls can come to the rescue. For now, the VIX is up slightly today, suggesting that sentiment may still be mixed. 

As we pass the noon hour in New York, the Dow Jones Industrial Average is off 20 points; the broader S&P 500 Index is down slightly, too; and the NASDAQ is shedding abut one point. Overall, market breadth is slightly negative, as declining stocks are just ahead of advancers on the NYSE.  A quick look at the various market sectors also shows a somewhat fragmented market today. There is weakness in the utility, basic materials, and energy issues. However, the telecom and technology sectors are making modest strides. Notably, the technology issues, and the broader NASDAQ, may be getting a bit of help from market leader Apple (AAPL), as that stock, which tumbled from about $700, has firmed up a bit lately, and is now back above $450. Elsewhere, the Semiconductor Index (SOX) is at new 52-week high ground, which may be helping too. Notably, bellwether company Intel (INTC Free Intel Stock Report) is advancing once again.

Traders received just one economic report today. This could also explain some of the lack of direction in the market, as traders do not do well in information vacuums. The trade deficit widened to $40.3 billion in May from $37.1 in April. However, this result was better than the figure analysts had expected. Tomorrow will be a busier day for reports, and some will, no doubt, be looking closely at the Fed’s Beige Book summation for June, which comes out in the afternoon. Elsewhere, in corporate news, the earnings reports have been minimal today. Nonetheless, shares of Microchip (MCHP) are trading higher after the tech company issued better guidance. - 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 After surging yesterday, shares of Heidrick & Struggles (HSII) are indicating a modestly higher opening this morning, after the executive-level staffing company confirmed a report that its Board of Directors is exploring strategic alternatives, including a possible sale of the company. Shares of lululemon athletica (LULU) are also poised to extend yesterday’s modest gain, now that the retailer of athletic apparel and accessories is starting to restock its shelves with its popular yoga pants, which were pulled from stores several months ago after quality control problems resulted in the fabric being too sheer.

On the earnings front, shares of discount retailer Dollar General (DG) and government contractor SAIC, Inc. (SAI) are both moving lower ahead of the bell after releasing April-period financials. On the other hand, investors cheered quarterly results from American Woodmark (AMWD), a manufacturer of kitchen cabinets and vanities, and its shares are up sharply in pre-market trading. – 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 stock market, so very tentative for much of the day yesterday, came to life late in the session, as investors, in what has become the prevailing pattern of late, became sufficiently reassured by the inflow of weak economic data, that they pushed equities notably higher--especially those on the 30-stock Dow Jones Industrial Average.

Thus, after an uneasy and largely uneven session for much of the day, in which the Dow managed to hold onto modest gains, while the other principal averages mostly dipped, there was a more concerted attempt at action by the bulls during the final hour of trading.

And that effort was wholly successful, as not only the Dow, which wound up gaining 138 points, or nearly one full percentage point, but also the NASDAQ (up nine points) and the Standard and Poor's 500 Index (ahead almost 10 points) joined the parade. However, to underscore the weaker aggregate tone of the market vis-a-vis the Dow, the S&P Mid-Cap 400 Index shed almost four points. Clearly, there was still some aversion to risk.

What basically prompted the late upturn, following what had been a very sharp selloff in the U.S. markets this past Friday, was a dour survey issued early in the morning by the Institute for Supply Management, the Arizona-based trade group. In that report, the ISM noted that manufacturing activity had contracted modestly in May, falling to a reading of 49.0. That was a point below the 50.0 line, which separates an expanding industrial sector from one that is pulling back. The positive spin on that weaker metric as far as Wall Street is concerned is that should the economy turn softer here, the Federal Reserve would be less inclined to stop or even slow the pace of bond buying to prop up the economy. It has been these aggressive asset purchases that have helped to propel the U.S. equity market to a long succession of all-time record highs this year.

Now, armed with this fear of a possible imminent slowdown in the aforementioned bond buying, traders are eagerly awaiting each new report on the economy. And for material releases, they will have only to wait until tomorrow morning when the ISM will issue its companion report on non-manufacturing activity. At this point, an increase in such activity is forecast. Of course, such an increase in strength had also been forecast for yesterday's manufacturing survey.

Then, on Friday, the government will release the most closely watched survey of the month, when it issues data on employment and unemployment. Should this report be weaker than expected, it would follow, that stocks would rally. Should the non-farm payroll gain exceed expectations, stocks would logically falter.   

As for the current session, stocks in Asia were mixed overnight, with equities in China faltering, while the Nikkei in Japan rose nicely. In Europe, meantime, the bourses are mostly higher. And on our shores, the equity futures are up grudgingly with less than an hour to go before the start of the new trading day. It should be noted, that the U.S. market has been up for some 20, or so, Tuesday's in a row this year. So, there is some hope among the bulls that this welcome trend will continue today. We shall see. – Harvey S. Katz

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