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After The Close - After a day in which the major U.S. equity indexes did not stray too far from the neutral line, volatility returned in a big way during today’s session. The equity indexes fell sharply at the start of trading, and then nearly recouped all of the earlier losses by the midday hour on the East Coast, with the Dow Jones Industrials actually making it to the plus column for a few minutes. But then, the sellers returned in the second half of the session to push the equity indexes sharply lower once again by the close. Even when the indexes were rallying, market fundamentals remained weak, specifically the breadth between declining and advancing issues—and thus it was not overly surprising that selling picked up once again. All told, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index shed 117, 37, and 17 points, respectively. The selloff was even more pronounced for the small- and mid-cap indexes, which would suggest that investors were once again showing resistance to risk.

Stoking the worries on both Wall Street and in the overseas markets—the major equity indexes in Asia and the European bourses also were notably weaker—were central bank fears. In particular, investors were roiled by news that the Bank of Japan was holding its monetary policy steady. At times over the last fortnight, the world equity markets have sold off on worries that the global central banks, particularly the U.S. Federal Reserve, would eventual ease off on their accommodative monetary policies and likewise rallied after the release of ho-hum economic data, on the belief that a lackluster economy would keep the financial leaders on the offensive. In the end, the volatility has produced moves of more than 100 points by the Dow in either direction from the previous day’s close in seven of the last 10 sessions. Also causing some of the intraday volatility the last few weeks have been some low volume trading days.

From a sector perspective, there was not much for investors to hang their hats on today, as it was a sea of red ink across the top-10 sectors. The biggest laggards were those most closely tied to the global economy. The aforementioned Bank of Japan actions, or lack thereof, raised concerns about the global economy, and likely prompted the selling in the economically sensitive groups. The basic materials, financial, and energy stocks suffered the biggest losses, but even the more defensive groups struggled too. Within the basic materials category, the construction materials and precious metals issues were down considerably.

Meantime, it is also worth noting that the yield on the 10-year Treasury note, though off a few basis points in the latest session, recently hit a 14-month high and is currently higher than the yield on the S&P 500. Historically, such a scenario has not been a good indicator for stocks. However, the yield currently sits well below 3.00%, so we believe it is still not at a level that will deter individuals from investing in stocks going forward. -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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12:40 PM EDT - The stock market opened sharply lower this morning, but in a stunning reversal, has now pared almost all of its losses. At just past noon in New York, the Dow Jones Industrial Average is off three points; the broader S&P 500 Index is down five points (-0.3%); and the NASDAQ is lower by 10 points (-0.3%). Market breadth still shows considerable weakness, as declining stocks are outnumbering advancers by a wide margin on the NYSE. Notably, there are now about 320 stocks at new lows, versus about 50 at new highs on the NYSE, suggesting some weakness has been building under the surface. In contrast, these figures are quite a bit better on the NASDAQ, which has outperformed the broader market for the past month, or so.  Almost all of the market sectors are trading lower today, with further losses in the basic materials and the financial names. The healthcare and the utility issues are holding up a bit better, as investors tend to rotate into these defensive and high-yielding stocks when the market becomes volatile.
Technically, the S&P 500 Index encountered some resistance, as it attempted to move beyond the 1,650 level yesterday. Today, it seems, the market is having further difficulties. While a move higher does seem to be challenging, it should be noted that the bulls did move decisively this morning to support stocks, and so far, a full-scale selloff has been averted. However, the day is not yet over, and hopefully the rebound staged this morning will extend through the afternoon.

Traders here in the United States seem to be concentrating on the overseas markets again. In Asia, Japan’s Nikkei has been quite volatile, falling more than 1% overnight. Traders were likely disappointed that the Bank of Japan decided to leave its interest rates and asset purchase program unchanged. Meanwhile, in Europe the bourses are finishing up a weak session, as well.

The economic news has been minimal today. Wholesale inventories increased 0.2% for the month of April, which, more or less, met expectations. Tomorrow will also be a light day for reports.

In corporate news, shares of lululemon athletica (LULU) are trading lower. The apparel company reported decent results, but investors may be concerned about a management change. In M&A news, Dole Food (DOLE) shares are soaring on reports that its Chairman, David Murdock, may buy all of the company’s outstanding shares. The second quarter is set to close shortly, and as pre-announcements start to come out, that may help provide investors with greater clarity.   - 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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10:30 AM EDT - After a stellar showing last Friday on some sense that the U.S. Federal Reserve might not be ready to slow down its bond-buying program just yet, and following the uneasy calm that settled over Wall Street yesterday, as investors nervously waited for some confirmation of this status quo at the lead bank's FOMC meeting next week, the market is selling off again this morning.

The apparent rationale for this latest pullback, which follows a fortnight, or so, of weakness on Wall Street prior to the comeback late last week, is the fact that the Bank of Japan disappointed global markets overnight by holding its monetary policy steady, instead of cutting interest rates, as many were expecting. This has stirred growing worries that our Fed might opt to start easing off on its accommodative monetary policies next week, or soon thereafter.

Investors clearly are nervous about what happens when the Fed finally does slow its monetary easing measures. And the answer may not be pretty for those long equities.

Thus, just the hint of what might occur has sent in the sellers, with the Dow Jones Industrial Average now off by 115 points, after having earlier been lower by 150 points. The NASDAQ, meantime, is off by more than 30 points, while the small and mid-cap indexes are lower by more than a full percentage point. Losing stocks are swamping winners on the Big Board by almost 10-to-1, while the gap on the NASDAQ is on the order of some six to one.   – Harvey S. Katz

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 There is some M&A news out this morning. Indeed, shares of Dole Food (DOLE) are surging in the premarket, after David Murdock, the CEO of the fresh fruits and vegetables company, offered to purchase the 60% of DOLE stock that he does not already own for $12 a share in cash. Elsewhere, Japan-based SoftBank has raised its bid for telecommunications company Sprint Nextel (S) in an effort to beat back a competing offer from satellite television provider Dish Network (DISH). Sprint shares are indicating a modestly higher opening this morning as a result.

On the earnings front, shares of lululemon athletica (LULU) are trading sharply lower ahead of the bell. Although the athletic apparel and accessories retailer announced good April-period results and a solid outlook, investors appeared rattled by the announcement that CEO Christine Day plans to step down once the Board of Directors finds a successor. Also, the stock of Texas Instruments (TXN) is indicating a modestly lower opening today, after the chip maker updated its guidance. On the other hand, shares of snack and nut company Diamond Foods (DMND) are up slightly in the premarket on earnings news.

Finally, the stock of Corinthian Colleges (COCO) is plunging ahead of the bell, after the education services provider announced that it is under investigation by the SEC related to issues surrounding student loans, recruitment, attendance, completion, and other items. – 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 - An uneasy calm settled over Wall Street yesterday, one trading session after the stock market had soared following the release of data showing that the U.S. employment data for May had come in strongly enough to suggest that the four-year old business upturn was alive and well, but weak enough to possibly dissuade the Federal Reserve from slowing the pace of its bond buying just yet.

But that stellar showing, in which among other things, the Dow Jones Industrial Average had soared by more than 200 points, proved to be a one-day affair, as the market largely marched in place, albeit with a series of frenetic, but limited up-and-down intraday moves in the latest session. By the closing bell, the market, which was devoid of any hard news on our economy, as it will be again today and tomorrow, was essentially unchanged, with the Dow losing 10 points, the Standard and Poor's 500 Index easing back half a point, and the tech-heavy NASDAQ inching forward by fewer than five points. This uneven performance was underscored by the comparatively mixed showing by most mutual funds yesterday.

Our sense continues to be that the Fed will be in no hurry to turn off the spigots. However, more on that score will be heard next week when the central bank is due to hold its latest FOMC meeting. There have been some concerns that, at the minimum, the bank will slow the pace of asset purchases in the months to come. On that count, a Fed governor last night suggested that the time for the Fed to slow down such bond buying was at hand. We sense that this may still be a minority opinion, as we think that Fed Chairman Ben S. Bernanke is still more attuned to the downside risks of the economy than to inflation. But we are ruling nothing out at this time as the markets have been surprised before.  

Meanwhile, if things are still relatively calm on our shores, they are in somewhat of a stressful situation overseas, with turmoil now in the streets of Istanbul, while in Japan, the markets saw some selling today after that nation's lead bank refrained from expanding a loan program, as many had expected it would. Losses of more than a percentage point were sustained by the Nikkei overnight, as was the case in Hong Kong. In Europe, meantime, the bourses are all lower, generally shedding more than a percentage point.

Not surprisingly, there is selling in the futures over here, with the S&P futures off by 14 points; the Dow futures lower by more than 100 points, and the NASDAQ futures in the red to the tune of some 28 points. These losses, in place throughout the morning, seem to be gaining some momentum, as the futures are all near their lows for the session, presaging a notable reversal at the start of the trading day. Interestingly, after gaining ground for 20 Tuesdays in a row this year, the market stumbled a week ago and could be putting itself in position for a second-straight Tuesday setback. Stay tuned. – Harvey S. Katz

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