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After the Close - The final day of a trading week that set some important milestones for the major U.S. equity indexes ended on a quiet note. The major averages started the session in the red on an uninspiring report on the job market, but quickly steadied and then went on to retrace the earlier losses to finish the session slightly to the upside, at least among the large-cap indexes. The tech-heavy NASDAQ, as has been the case throughout the week, showed more strength than the Dow Jones Industrials and the broader S&P 500 Index. Our sense is that after some assessment of the July employment report, the investment community felt that the data were not formidable enough to push the Federal Reserve to step on the monetary brakes before this fall, at the earliest. Overall, the margin between advancing and declining issues was thin on both the Big Board and the NASDAQ. Among the top-10 sectors, some leadership came from the consumer discretionary stocks, while the energy issues were the biggest laggards.

Even with today’s listless performance, it was another bullish week for equities. Over the five-day stretch, the Dow Jones Industrial Average hit another intra-day record high and the S&P 500 Index pushed pass the psychologically significant 1,700 mark. And the NASDAQ, on the strength of some encouraging earnings reports from the technology sector, moved nicely higher. All told, the Dow 30, the NASDAQ, and the S&P 500 Index advanced 0.6%, 1.0%, and 1.1%, respectively, this week.

Turning back to today, the big news, as noted, was a tepid report on the labor market. Specifically, the Department of Labor reported that the nation added 162,000 jobs in July after creating a downwardly revised 188,000 in June. The figure fell short of the consensus expectation, which looked for the creation of 184,000 new positions. Meantime, the unemployment rate fell from 7.6% in June to 7.4% last month. However, a closer examination of this lagging indicator showed that the improvement was helped by many individuals giving up looking for a new job. Such persons are not counted in labor participation rate. All in all, it was no better than a mixed report on job creation and one that would probably not push the central bank to reduce its bond-buying efforts before this fall. The latter likelihood, which is typically viewed favorably by market participants, likely kept the major indexes from selling off following the unimposing labor report.

Meanwhile, there was some earnings news of note today, which for the most part was mixed. All in all, the fast-concluding second-quarter earnings season has been pretty good, with most companies topping previously lowered expectations. This has helped push equities higher, even with valuations rather pricey entering the peak earnings season. The S&P 500 Volatility Index (or VIX), which fell sharply today and finished the week just above 12, clearly is at a level that suggests equities are overbought. In addition to the fairly supportive earnings news, stocks are being helped by the lack of attractive alternative investments, as interest rates on fixed-income vehicles remain at historically low levels. That was even before the yield on the benchmark 10-year Treasury note fell more than 10 basis points today.

Looking ahead, the investment community’s attention will remain on the corporate world with the economic reports, save for data on nonmanufacturing activity and the trade gap, light next week. However, investors should note that only one Dow-30 company, Walt Disney (DIS Free Disney Stock Report), is scheduled to report results next week. The economic beat, though, heats up the following week. Our sense is that with earnings season soon to be in the record books, some more favorable news will be needed on the economy if the bulls are going to remain in the driver’s seat. Any slipup on the economic front could prompt some profit taking in an overextended market.  - 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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12:10 PM EDT - The U.S. stock market is putting in a somewhat weaker session today. However, the situation is stable, as the averages are off their lows.  It will be crucial to monitor traders' behavior in the afternoon, as this can be quite telling. At just past noon in New York, the Dow Jones Industrial Average, which is leading the market lower, is off about 26 points. The S&P 500 Index is lower by three points; and the NASDAQ is also down just three points. Relative strength on the NASDAQ over the past several weeks is actually a good sign, as it suggests that there is still some speculative sentiment operating, and traders, are not simply gravitating to the more defensive names.

Market breadth is slightly negative today, as declining stocks are ahead of advancers. Nonetheless, these figures do not indicate any broad-based selling. The market sectors are mixed to negative. There is some weakness in the energy group. Notably, crude oil is slipping a bit, possibly on concerns about the strength of the economy both here and abroad. The utility issues are also quite weak. In contrast, the basic materials stocks are holding up well, possibly helped by precious metals prices. There is also some relative strength in selected consumer names.

Technically, the S&P 500 Index moved above the critical 1,700 level yesterday, and is staying there so far. Hopefully, we will see some follow through over the next few days, to indicate a commitment to the recent move. Notably, with the second-quarter earnings season soon coming to a close, and equity valuations stretched a bit, it is not clear what will serve as the catalyst to drive the market higher from here. 

Traders are taking the day’s economic news in stride, so far. The government’s July employment report came in with numbers that were bit lower than had been expected, suggesting that the jobs situation may still be challenging. In an ironic way, some traders may actually be relieved by the news, as it suggests that the Fed may not be reversing its supportive monetary policies too soon. – 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 SurveyInvestors’ attention is centered on the lackluster monthly jobs report issued this morning, but the pace of earnings news hasn’t slowed either, so it is likely to be a busy day on Wall Street. On the earnings front, shares of social network operator LinkedIn (LNKD) appear set to continue their meteoric rise, as investors applaud the company’s June-period results. Other notable advancers include insurer American International Group (AIG), packaged foods giant Kraft (KRFT), restaurant operator Brinker International (EAT), media and entertainment outfit Viacom (VIAB), and automaker Toyota (TM). On the other hand, shares of health and lifestyle company Weight Watchers (WTW), energy heavyweight and Dow-30 component Chevron (CVXFree Chevron Stock Report), and coal company Alpha Natural Resources (ANR) are all down ahead of the bell, as investors took issue with their respective financial releases. – 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 - As has so often been the case during this long bull market, stocks roared ahead yesterday, the opening day of a new month. This time, after a pair of nondescript sessions to start the current trading week, the equity market began the latest session on a decidedly higher note and never looked back. In fact, to paraphrase a well-worn euphemism from the political arena, the bulls voted early and often, and continued to do so throughout the day.

Apparently, what got the ball rolling initially was some relief that the Federal Reserve had given no hint on Wednesday--after the conclusion of its latest FOMC meeting--that it was laying the groundwork for winding down its very popular bond-buying efforts. This major undertaking has spurred investors to gobble up stocks in recent months. True, the Fed has suggested that it will start to taper down this program later in 2013, with an eye towards ending it sometime during the middle of next year. However, no definitive timetable for such presumptive action was given at the aforementioned FOMC meeting.        

Still, while there was general relief on Wall Street Wednesday afternoon about the omission of such a timetable, stocks did not rally on this development. Instead, they essentially marked time, albeit with a series of gyrations along the way during the final hours of trading. However, in Asia overnight, and afterwards in Europe yesterday morning, the bulls did make a statement, in part on relief at the Fed's continued supportive monetary stance, as well as by indications Europe was moving in lockstep on the interest-rate front.  

Then, when Wall Street saw such action abroad, the Labor Department reported another drop in jobless claims in the latest week, and the Institute for Supply Management indicated a surprising surge in manufacturing activity in July, our markets opened to the upside and took it from there. To wit, the Dow Jones Industrial Average, which had surged to an all-time high on Wednesday, before backtracking late in the day, resumed its climb into uncharted territory yesterday, closing above 15,600, for the first time ever, on a gain of 153 points. The Standard and Poor's 500 Index, meantime, jumped 24 points, finally surpassing the 1,700 plateau that had been something of an obstacle. The small- and mid-cap indexes also did well, as gaining stocks held comfortable pluralities over declining issues on both the Big Board and the NASDAQ. Thus far, at least, there seems to be no stopping the bullish stampede.

That said, with this latest surge, on top of a succession of all-time highs recorded earlier this year, valuations are now stretched. This would imply that a lot of things need to go right before we proceed much higher in this market. However, we remind our readers that even if the market is extended, history teaches that it can remain so for long stretches of time. The same extends for periods of undervaluation, as we saw in 2008 and early 2009. Thus, there is no sense, as yet, that a correction, while perhaps a bit overdue, will evolve in the very near term.

Meanwhile, although everything favored the bulls yesterday, there was one area of concern, that being this morning's report from the U.S. Labor Department on the employment situation in July and the accompanying unemployment rate, two separately taken surveys that combined generate the most closely watched metric of the month. Expectations were that the nation had added 184,000 jobs in July, while the unemployment rate was forecast to have dipped from 7.6% to 7.5%. Those metrics are now in and the results were mixed, overall, with the nation creating 162,000 new jobs, while the jobless rate fell to 7.4%, which was somewhat better than expected. The equity futures, meantime, following this report now suggest a mixed opening, with notable strength in the NASDAQ, but a sluggish start in the S&P. This follows improvement in Asia overnight and a mixed showing in Europe so far this morning. We shall see if this renewed bullishness will persist, as it did yesterday. 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.