After the Close - The major U.S. equity indexes started the day in negative territory, but were able to quickly regroup and then move modestly higher before trading in a narrow band just above the neutral line for much of the second half of the session. By the closing bell, the Dow Jones Industrials, the NASDAQ, and the S&P 500 Index were incrementally higher. Today’s session was a good sign for the bulls, as the sellers were kept at bay even after the market’s strong showing last week. Coming into the new week, some may have thought that a bit of profit taking could emerge in a market that is clearly overextended right now, but that was not the case.  Overall, advancing issues held a comfortable lead over decliners on both the Big Board and the NASDAQ, to the tune of nearly two-to-one on both.

It should also be noted that volume was rather light. Perhaps, traders are hesitant to make any more big commitments in a frothy market ahead of a heavy batch of earnings reports the next few days and comments later this week from Federal Reserve Chairman Ben Bernanke. The investment community is expecting the Fed Chairman to provide some more color on the lead bank’s thinking regarding monetary policy, particularly when it plans to scale back on its monthly bond purchases.

Speaking of the economy, before the new trading week on these shores commenced, investors were greeted by a few significant reports, both from here and abroad. Overnight, traders took some solace in data that showed that the pace of China’s GDP growth eased to 7.5% in the second quarter on a year-over-year basis. Although down sequentially from the 7.7% rate in the first quarter, investors were relieved that the decline was not as big as some economists’ were predicting. Meantime, at 8:30 A.M. (EDT), we learned that core U.S. retail sales, which excludes volatile components, such as automobiles and gasoline, rose a very tepid 0.1%, or half the improvement recorded in May. While the market did not appear to have much of a reaction to the week’s first major economic report, the lackluster growth in the retail sector was taken by some investors as a sign that the lead back may not be in a rush to step on the monetary brakes. The psyche of the consumer is likely to be closely monitored by the Fed, as consumers account for nearly two-thirds of the nation’s economic output.

Meantime, it will be a busy week for earnings, but the release of reports does not kick into high gear until tomorrow. Earlier today, we did learn that banking giant Citigroup (C) posted better-than-expected earnings on an above the consensus top-line result. The Citigroup news pushed the financial stocks higher in the latest sector. The other economically sensitive groups, most notably the basic materials and industrial areas, also managed to finish the session in positive territory, helped, in large part, by relief that the pace of economic growth in China did not slow as much as some pundits had feared. It should also be noted that the utilities were the big winner among the 10 major sectors. The utilities were the beneficiaries of the pullback in the yield on the benchmark 10-year Treasury note. Many investors seeking income rotated out of fixed-income securities and into the high-yielding utilities over the course of today’s session. Conversely, there was some weakness in the consumer discretionary stocks, likely owing to the aforementioned lackluster growth in the retailing space last month.  - William G. Ferguson

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


12:15 PM EST - The stock market got off to a somewhat weaker start this morning, but is now firming up. As we pass the noon hour in New York, the Dow Jones Industrial Average is up 18 points (0.1%); the broader S&P 500 Index is ahead two points (0.1%); and the NASDAQ, which is showing some leadership, is tacking on four points (1.0%). Market breadth suggests a positive bias to today’s session, as advancing stocks are ahead of decliners by about 2 to 1 on the NYSE. Essentially all of the market sectors are in positive territory, with particular strength in the utilities. Notably, investors fearing higher interest rates, sold off these issues a few weeks ago, and that move may have been a bit overdone. The telecommunications names are also doing well, helped by merger and acquisition news. Specifically, AT&T (T - Free AT&T Stock Report) has offered to buy Leap wireless (LEAP). The financials are also having a good day, thanks to a solid showing by the banks. In contrast, there is weakness in the healthcare issues. In this area, the biotech names, which have been doing well lately, are off today.

Technically, the S&P 500 Index is now at 52-week high ground. Notably, today’s move up, assuming it sticks, will mark the eighth consecutive daily advance on this broad index, and suggests that the bulls are still in control of this market.  The second-quarter earnings season is just starting up, and assuming the reports are favorable, that may help push the markets still higher, at least temporarily.  We recently heard from Citigroup (C). That stock is trading higher on a better-than-expected report. Notably, the banks seem to be recovering, which is important, as this was one of the hardest hit sectors in the last recession. We will hear from some leading financials this week, as Bank of America (BAC - Free Bank of America Stock Report) and American Express (AXP - Free American Express Stock Report) are set to post results.

The economic reports released today were mixed. Retail sales increased 0.4% in June, coming in much weaker than many had anticipated. However, the economy in the New York area is looking stronger, as the Empire State Manufacturing Report for July came in well ahead of the consensus view. Further, business inventories rose 0.1% for the month of June, which was a bit better than had been expected, but slightly lower than last month’s reading.   - Adam Rosner

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


Stocks to Watch from The Survey The earnings floodgates are set to open this week, with 10 Dow-30 companies scheduled to release second-quarter results between tomorrow and Friday. Earnings news is rather light this morning though, and Citigroup (C) has the spotlight largely to itself. The bank delivered better-than-expected June-period earnings, and the stock is up modestly in the premarket as a result. 

Elsewhere, shares of Leap Wireless (LEAP) are soaring ahead of the bell, after the telecommunications company agreed to be acquired by larger rival AT&T (TFree AT&T Stock Report). Under terms of the proposed deal, the Dow-30 component would pay $15 a share (about $1.2 billion) for Leap, an 88% premium to the equity’s Friday closing price of $7.98. However, investors seem to think that another suitor will emerge, as LEAP stock is set to open north of $17 a share when trading commences. – 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 - The bulls are clearly on the march, as Friday, which saw just a nominal overall gain still marked the completion of the second best week this year for the leading averages. To wit, apparent relief that the Federal Reserve looks to be on board with continued solid monetary support and low short-term interest rates for the foreseeable future has Wall Street in a buying mood.

In fact, the Dow Jones Industrial Average and the Standard and Poor's 500 Index have each climbed to within a few points of all-time highs, while the tech-heavy NASDAQ, which remains far from its record peak, is nevertheless at a 12-year high, on intense buying in a range of high- and low-profile names.

Meanwhile, the week ahead, which is likely to start out on a modestly higher note for equities if the current supportive action in the futures is sustained in the half hour or so before the commencement of the new trading day, should be dominated by the pending issuance of hundreds of earnings reports, as second-quarter reporting season moves into high gear. In fact, no less than 10 Dow-30 corporations are scheduled to issue their results in the current five days. In addition to earnings, there also will be a steady flow of economic news to consider starting with this morning's just-issued retail sales report, which detailed that this sector strengthened further in June, albeit somewhat less than forecast. Then, tomorrow, we are due to get the Consumer Price Index released an hour before the stock market opening. That report will be followed just 15 minutes before Wall Street's commencement of trading with the issuance of data on industrial production and factory usage. Wednesday will then bring the monthly report on housing starts and, in the afternoon, the release of the Federal Reserve's Beige Book. Finally, the week concludes with Thursday's release of surveys on jobless claims and the leading indicators.

In addition, Fed Chairman Ben S. Bernanke is scheduled to speak on the economy this week, where he is almost certain to be asked to expand upon his recent musings about the central bank's policies, which include the likelihood of continued monetary support in the short-term end of the interest-rate curve until 2015, or later, while the bank goes ahead later this year with plans to slow the rate of bond buying, as it has been suggesting that it would do.

Then, there is the international scene, which today saw China issue its latest GDP data, and, as expected, growth slowed in the latest quarter on a year-over-year basis, coming in at 7.5%. But that was notably better than the forecast that some were maintaining that growth would have slipped below 7%.

For the most part, however, the focus is likely to be on earnings, where the second quarter's results are due to come in fast and furious. Expectations have been reduced in recent weeks, and if past is prologue, such expectations should be met and often exceeded, lending further support to a stock market that looks increasing frothy at this time. – Harvey S. Katz

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