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After The Close - The first day of the new trading week saw some mild profit taking, which is not overly surprising as the equity market began the day clearly overbought. (The S&P 500 Volatility Index, or VIX, entered the new week below 12, a level that suggests that trading has overheated). The major equity indexes started the day in the red and had a hard time finding their equilibrium. Thus at the closing bell, the S&P 500 Index was off modestly, while the setback for Dow Jones Industrials was a bit more pronounced. Overall, the session could be termed mixed with a slightly negative undertone. Declining issues led advancers on the Big Board, while the reverse held true on the NASDAQ.

From a sector perspective, it was mostly red ink across the 10 major groups. The day’s biggest laggards were the energy and utilities stocks. Conversely there was some demand for technology, consumer staples, and telecommunications issues. However, no particular sector stood out in the rather listless session.

The biggest news item on a slow summer Monday was the latest report on the nonmanufacturing sector, which happens to be, along with tomorrow’s trade gap data, the only notable reports on the U.S. economy this week. Today’s report on the services sector did not disappoint, as the Institute for Supply Management said that nonmanufacturing activity came in at 56.0. That was materially better than the June reading of 52.2 and moderately ahead of the expected score of 53.3. It also was a full six percentage points above the 50.0 dividing line between an expanding and a contracting non-manufacturing sector and yet another indication, along with last week’s positive companion report on manufacturing activity, that the U.S. economy is pushing higher, albeit at very measured pace. The market average pared a bit of the earlier losses following the release.

Another piece of interesting information came from the Federal Reserve today. Specifically, the central bank’s recent survey of bank senior loan officers revealed that financial conditions remained favorable during the second quarter, despite a notable spike in interest rates. More important, the assessment said that demand for consumer lending strengthened across the board, including in the housing sector. This is noteworthy as the housing sector has been an important cog in the recent economic expansion. The report may also may ease the investment community’s concerns that a tapering off of bond buying later this year would harm the ongoing housing recovery. However, the positive report from the Federal Reserve did not give a boost to the homebuilding stocks, with the majority of the homebuilders finishing the latest session in the red.

Meantime, the fast-concluding second-quarter earnings season did not provide many headlines today. As noted in our earlier market commentary, Tyson Foods (TSN) reported better-than-expected earnings on improved chicken and beef results. After the close of trading today, we will get quarterly results from Twenty-First Century Fox (FOXA), formerly known as News Corporation. – 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 U.S. stock market is putting in a mixed-to-weak session today. At just past noon in New York, the Dow Jones Industrial Average is off 48 points (-0.3%). The S&P 500 Index is slightly lower. Also, the NASDAQ, which had been bucking the downtrend, is now slipping a bit. Market breadth is generally weak today as declining stocks are ahead of advancers on the NYSE. Furthermore, most of the market sectors are in negative territory. There is weakness in the utilities and select consumer names. However, the basic materials issues are doing selectively better. Further, there is also some relative strength in the technology names.

Technically, the S&P 500 Index has managed to stay above the 1,700 level. This area may carry some “psychological” significance, so it should be watched. Trading volumes have been light lately, which is not unexpected as the summer can be a less active time for financial firms. Nonetheless, a pickup in volumes would signal some commitment on the part of the bulls. However, the market may be taking a breather, as it likely ran up in anticipation of the monthly employment report released at the end of last week. While that news was lukewarm, the markets did not sell off, which is a good indication. Some traders may be feeling that a choppy recovery will keep the Fed from acting too soon.

It has been a light day for economic news. However, we did receive one constructive report. The ISM Non-Manufacturing Index provided a reading of 56.0 for July, which was notably better than the 52.2 figure posted in the prior month, and ahead of the figure analysts had been expecting. Tomorrow, will be a light day for reports, too. Although, we will get the Trade Balance figures for the month of June, and analysts will likely want to see a slightly narrower trade gap.

Meantime, it has been a quiet morning for earnings related items. Of note, Tyson Foods (TSN) shares are trading higher, after the chicken processor posted better -than-expected sales and earnings. With many of the larger companies having already posted their reports, we will now get a look at some of the smaller names. These issues tend to be volatile, and can still influence the markets, particularly in sectors like biotechnology, computers, the Internet, and chemicals. -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 - As earnings season enters the late stages, we start this week off with an eye on Berkshire Hathaway (BRK/B).  The investment giant, which is led by Warren Buffett, posted impressive earnings after the close on Friday. And, as if on cue, the shares are up a bit in early trading.

In other news, poultry producer Tyson Foods (TSN)  reported that its third-quarter profit rose nicely on a year-over-year basis. This stock has gotten a handsome bounce, as well, to start the week off

One tidbit from the technology world is that the shares of Qualcomm (QCOM) are up on positive news, as a new Motorola smartphone is set to give that company a boost, given that it uses processors made by QCOM. - Erik M. Manning

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Before The Bell - After rallying nicely on Thursday in apparent anticipation of a strengthening employment report, the bulls were ready and seemingly waiting for the government's expected strong release on Friday morning at 8:30 (EDT). What they received, instead, was a less than eye-catching report of below-consensus job growth in a shrinking labor market.

In truth, the payroll metrics were not all that bad. After all, non-farm payrolls did increase by 162,000 in July, and that was just some 12% below the forecast of 184,000. Moreover, the revisions for May and June were just slightly negative, affirming that job creation those months was still appreciable. Still, the shortfall was a bit of a surprise, especially as some prior economic reports, notably the prior day's data on July manufacturing, was much stronger than forecast. Also, while the jobless rate fell from 7.6% to 7.4%, the drop was largely reflective of a shrinking labor market. That is, a number of unemployed simply left the workforce, by halting their job search. They are not counted among the jobless

So, with this rather unimposing employment report in hand, an expected opening selloff on Wall Street evolved. However, this pullback, like so many that had preceded it, was modest in scope and short-lived. Equities, in fact, steadied right away, and while spending the lion's share of the day in minus territory, in fact, never straying too far from the neutral line. Some short covering near the close, meantime, pulled the leading large-cap indexes into the black, although the small-cap Russell 2000 ended flat, while the Standard and Poor's Mid-Cap 400 Index held a loss of four points. Still, given the less-than-scintillating jobs report, this performance in an overbought stock market must be judged as fairly constructive.   

One explanation for the staying power of the bull market could well have been the bad news is often good news on Wall Street these days, meaning that the sluggish job creation could well keep any monetary tapering by the Federal Reserve at bay until somewhat late this year. In fact, some are already speculating that the expected slowdown in asset purchases in September may now not materialize until December. We shall see. Between now and year-end, there will be four additional employment reports and a succession of other metrics that will undoubtedly have an influence on monetary policies--not to mention the likelihood of a new Fed Chairman.

Meanwhile, a new week is now upon us, and thus far the expectations are inconclusive. To wit, the markets were mixed overnight in Asia, while in Europe, the early numbers trickling in show that the bourses are little changed. And, as if to underscore this uneven tone, we saw some better economic readings in London, but some mild economic backtracking in Germany. And over here, in anticipation of this morning's issuance on non-manufacturing data for July, which are expected to show a modest further increase, our equity futures are also mixed, presaging an uneven opening when traders get down to business in less than an hour from now.

As to other influences in the week to come, we still will be getting some earnings news, although reporting season is nearing an end, while on the economic front, tomorrow will bring news on the international trade front, while Thursday will bring the weekly report on first-time and continuing jobless claims. – Harvey S. Katz

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