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After The Close - The stock market, which had rebounded nicely yesterday, fell back to its losing ways early today. But by the closing bell, most of the major equity indexes, with one exception being the Dow Jones Industrial Average, had worked their way almost fully back from earlier lows. Lending some late support to equities was growing hope that progress would soon be made on the fiscal front. Investors should note that President Obama plans to hold a meeting with Congressional leaders later today to discuss the ongoing government shutdown.

Still, the budget impasse and the continued government shutdown was predominately behind the selling on Wall Street, though it could have been worse for those long equities.  The Dow Jones Industrial Average was notably weaker, shedding 59 points. Even here, though, more than half the early loss was overcome. The big culprit was a poor showing from United Technologies (UTX - Free United Technologies Stock Report). That stock fell on worries that a continuation of the federal government shutdown could jeopardize some of the budget that is allotted to defense spending, an area where United Tech. does significant business. Meantime, the NASDAQ and the S&P 500 Index also were able to stage a partial rally in the second half of the trading day and those two indexes were off just slightly.

From a sector perspective a majority of the 10 major groups finished in the red, but like the aforementioned indexes were well off of their earlier lows. The biggest laggards were the industrial and consumer staples stocks. The weakness in the industrial space, as noted above, was mostly due to the sharp drop in the aerospace and defense issues. In the consumer noncyclical area, the stocks of the nonalcoholic beverage makers were the biggest losers on the day. Conversely, there was some mild interest at times today in the basic materials and technology issues.

The middle day of the trading week brought some more news on the economy, but none of it was a headline grabber that would divert the investment community away from the happenings, or lack thereof, on Capitol Hill. On the labor front, we learned from payroll processing giant Automatic Data Processing (ADP) that 166,000 private sector jobs were created last month. That figure was up from the prior month’s downwardly revised figure, but below the consensus expectation of 170,000 new payrolls. (Investors should note that this could possibly be the last report this week on this all-important sector of the economy, as government-produced data on weekly jobless claims and the nonfarm payroll totals for the month of September may be delayed by the aforementioned shutdown.) In a separate report, we learned the MBA Mortgage Index slipped 0.4% following the prior week's increase of 5.5%.

Elsewhere, the news from overseas, particularly from the euro zone, was somewhat encouraging. Specifically, investors welcomed reports that Italy’s former Prime Minister Silvio Berlusconi was now offering support for current Prime Minister Enrico Letta. Mr. Berlusconi actions were likely prompted by reports that more than 20 lawmakers were ready to shun his party in order to preserve the current government. Earlier in the week, fears arose that turmoil in Italy’s government would jeopardize the nation’s ability to tackle its ongoing sovereign-debt problems. Italy’s main equity index rallied on the news, but most of the major European bourses finished lower on the day.   - 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 opened sharply lower this morning, as fears about government disruptions, the budget uncertainty, and even the upcoming debt-ceiling debate continue. Nonetheless, the market has managed to recover a good chunk of its losses. At just past noon in New York, the Dow Jones Industrial Average is off 73 points; the broader S&P 500 Index is down five points; and the technology-heavy NASDAQ, which is again holding up better than the other averages, is off seven points. Market breadth still suggests a negative tone to today’s session, with declining stocks outweighing advancers by roughly two to one on the NYSE.

Most of market sectors are in negative territory. There is notable weakness in the industrials, as the defense and aerospace names are lower. The consumer non-cyclical group is also quite weak. In contrast, the basic materials stocks are advancing, as the precious metals issues are up nicely. Indeed, gold is trading higher by over 2% to $1,316 an ounce. Also, oil is rising today, to $103 a barrel. This may explain some relative strength in the energy group, with gains in the alternative energy companies.

Technically, the S&P 500 is still trading above its 50-day moving average, located at about 1,680. Earlier today, the index tested this area, and found some support, which was encouraging. Once again, we have seen the bargain hunters moving in on weakness, which suggests some support for stocks. Nonetheless, the recent weakness in equities has likely removed some of the “oversold’ sentiment that prevailed in early September when the market staged a large advance. The VIX is higher today, to about 16.25, and is well off its 52-week low of about 11, showing that bullish sentiment is no longer excessive. This may well be healthy in the long run, and set the stage for another market advance.

Traders received a bit of economic news today. According to ADP’s Employment Change report, 166,000 private sector jobs were added in September, which while better than last month’s reading, was a bit shy of analyst expectations. With the government shutdown, it is a bit unclear at this point, which reports will be coming out in the days ahead. For instance the government was slated to release the weekly initial jobless claims data tomorrow, and the employment report for September on Friday. However, these releases may be in jeopardy.

In corporate news, Monsanto (MON) stock is off sharply, as the agricultural chemical company posted weak results in its seasonally slow August period. - 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 SurveyCorporate news is rather light ahead of the bell. On the earnings front, shares of Monsanto (MON) are indicating a moderately lower opening today, after the agricultural products provider reported a wider-than-expected loss in the seasonally slow August period. On the other hand, the stock of credit card processor Global Payments (GPN) is up nicely in pre-market trading, thanks to better-than-anticipated August-quarter results and an upbeat outlook. – 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 stock market, in a steady downtrend over the past week on fears of a pending government shutdown, managed to put into place a nice rally yesterday following a failure of the two sides in Congress to fashion a workable compromise that would keep the partial shutdown, which did ensue, at bay.

Perhaps, it was a case of sell on the rumor and buy on the news, in a reversal of the classic phraseology often employed on Wall Street. Or it might have been a result of bargain hunting following the recent selloff. Whatever the case, stocks rose at the open and continued to weather all attempts to pare the advance as the session wound down. By the close, all of the averages, led by the NASDAQ, which surged 46 points on the day, or better than one percent, the Standard and Poor's Mid-Cap 400, and the small-cap Russell 2000 were strongly in the black, on a day in which more than twice as many stocks increased in value on the Big Board as declined, notwithstanding the rather more moderate final percentage gain in the 30-stock Dow Jones Industrial Average.  

In the end, the likely reason for the market comeback yesterday was the belief that the shutdown would prove temporary and not, therefore, noticeably injurious to the economy. That complacent approach, based on the belief that neither political party wants to be blamed for a long shutdown, is based on the experience of 1995 when a shutdown proved short lived, and the stock market rose in the succeeding several months. However, if this shutdown were to last for weeks, or longer, rather than days, as the optimists have concluded, the outcry both on Wall Street and on Main Street would be considerable. For now, however, the bulls are staying calm and collected, in the aggregate.

Of course, the shutdown is just one of two potential depressants facing our economy. The other, and notably larger problem, would be the failure in Washington to agree on a plan to raise the debt ceiling. The deadline for that unwelcome event is October 17th. The result of such a failure would be a default, which presumably no one wants. For that there is no precedent. Our sense continues to be that a default will not occur, but the situation in the nation's Capitol is so dysfunctional that this assumption is tenuous at best.    

Meanwhile, the world's stocks rose yesterday, which gave our markets additional cause to assume a generally bullish posture in the latest day's trading. Also helping those long equities yesterday was an upbeat report from the Institute for Supply Management, the Arizona-based trade group, on manufacturing activity across the country. That key index hit a two-and-half-year high in September, modestly exceeding expectations and results in August. The companion report on non-manufacturing activity is due out tomorrow. We also note that Friday's scheduled release by the Commerce Department on monthly job creation and the jobless rate is unlikely to be issued due to the partial government shutdown discussed above.

Now, a new day dawns and there is little of note on the economy to sway investors one way or the other. However, the markets are showing less pep this morning than 24 hours ago, with stocks mixed in Asia overnight, held in check there by a 2.2% drop in Japan's Nikkei 225. China's markets were closed due to a holiday. And in Europe, stocks are lower so far this morning, with the London FTSE, the Frankfurt DAX, and the Paris CAC-40 all in the red. However, Italy's market is nicely higher as that nation's recent financial flare up appears to now been easing somewhat. Meanwhile, over here, our futures are selling off after the respite yesterday, with the Standard and Poor's 500 Index futures off by almost 12 points and the NASDAQ futures lower by more than 15 points. All of this would seem to presage a lower opening in less than an hour from now.

As to the U.S. markets going forward, our sense is that worries about the debt-ceiling questions will easily trump the shutdown concerns. Should the debt-ceiling be violated, the repercussions could be significant. – Harvey S. Katz

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