After The Close - The U.S. stock market put in a progressively weaker session today, as traders looked to Washington for answers. Unfortunately, Congress has been unable, in one instance, to agree on a budget, and the government shutdown continues. Further, politicians have yet to put in place at least a temporary solution to the nation’s debt-ceiling problem, even as the widely-watched October 17th deadline draws closer. Ultimately, this kept traders, who seem to have adopted a wait-and-see approach, on the sidelines for much of the day. However, it should be noted that there was marked selling near the close of the day. At the end of the session, The Dow Jones Industrial Average was down 133 points; the broader S&P 500 Index was off 12 points; and the technology-heavy NASDAQ was lower by 21 points. Market breadth was quite negative, as declining stocks outnumbered advancers by about three to one on the NYSE.

Weakness was seen across almost all the market sectors. The utility stocks again suffered large losses, while many of the consumer names were quite weak. In contrast, the basic materials stocks managed to advance slightly, as investors seem to be showing a renewed interest in the metals names, such as U.S. Steel (X).

Technically, the S&P 500 Index closed just below the 1,700 mark at 1,698, and this critical area may put up some resistance. Meanwhile, the mood on Wall Street has turned more apprehensive, as the VIX moved about 16% higher, to over 18.50 today.

There was just one economic report released today. Here, the economy in the New York region may be softening, as the Empire Manufacturing Index came in at 1.5 during the month of October. This result was below the September reading, and also lower than analysts had expected. As the government shutdown continues, economic reports will be limited this week.

Meanwhile, the September-quarter earnings season is in full swing, as a few heavy hitters have reported. Today, Coca-Cola (KO - Free Coca-Cola Stock Report) put out figures that, more or less, met expectations, but the stock was off slightly. Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report) shares moved a bit higher, as that company put out impressive results. Meanwhile, Citigroup (C) stock slipped, after the banking giant released disappointing numbers. Tomorrow, we hear from a number of financials, including American Express (AXP - Free American Express Stock Report), Bank of America (BAC), US Bancorp (USB), Bank of New York (BK), and prominent investment enterprise Black Rock (BLK). No doubt, these issuances will not go unnoticed. - Adam Rosner

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


12:10 PM EDT - The major U.S. equity indexes traded in a tight band around the neutral line for much of the morning, but are now weakening somewhat as we pass the noon hour in New York. To wit, early on the market got some support from growing sentiment that some type of deal on the budget and debt-ceiling limit, even if it is of the “kick the can down to road” variety, would be reached by tomorrow, as both the Senate and the House are making strides. However, that assumption changed a bit after reports surfaced that the Senate and House are still likely to craft their own plans later this afternoon. The mood on Wall Street also was not helped by reports that suggested Speaker of the House John Boehner called the Senate’s latest proposal a “'hand grenade”. Such commentary would suggest that more work will need to be done before some kind of common ground is reached, a situation that may make for a continued rollercoaster ride for investors. 

Overall, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index are still not too far removed from the neutral line. The NASDAQ is showing a slight gain and the Dow Jones Industrials is off 35 points. Still, there is an underlying negative tone to trading, as declining issues are leading advancers on the New York Stock Exchange and the NASDAQ and the selling is a bit more pronounced in the small-cap Russell 2000 and the S&P Mid-Cap 400 Index. This, along with the rise in the S&P 500 Volatility Index (or VIX) suggest that investors are showing some apprehension about the ongoing contentious fiscal negotiations on Capitol Hill.

From a sector perspective, most of the 10 major groups spent much of the morning in the red and continue to do so as we pass the midday hour on the East Coast. However, some groups have held up better than others. Specifically, the more defensive healthcare and telecom sectors have seen mild buying likely owing to the aforementioned investor apprehension. The technology stocks are also holding up fairly well on strength in the biotechnology issues. Investors should also note that technology heavyweights Intel (INTC - Free Intel Stock Report) and Yahoo! (YHOO) are scheduled to report their latest quarterly results after today’s closing bell.

Speaking of earnings, it has been a mixed performance in the early going of the reporting season and that was no different today. Of note, shares of Coca-Cola (KO Free Coca-Cola Stock Report) are modestly higher after reporting in-line results, while Johnson & Johnson (JNJ Free J&J Stock Report) stock moved higher after beating on earnings. However, Citigroup (C) and Domino’s Pizza (DPZ) both fell short of Wall Street’s earnings forecasts; the investment community had a harsher reaction to the latter entity’s miss. Still, the earnings news is clearly being overshadowed by the negotiations on Capitol Hill.     

Looking ahead, it is too hard to predict whether the bulls or the bears will have the upper hand, as the near-term direction of trading will be guided by the unpredictable and unsettling negotiations on Capitol Hill. However, one thing we do feel is that such a backdrop is likely to make for more volatility and ultimately a rollercoaster ride for investors over the next few sessions.  - William G. Ferguson

 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 SurveyEarnings season heated up this morning, as a number of notable companies have reported third-quarter results. Early winners include shares of drug and medical supplies company Johnson & Johnson (JNJFree Johnson & Johnson Stock Report), beverage giant Coca-Cola (KOFree Coca-Cola Stock Report), financial services provider Charles Schwab (SCHW), and advertising agency Omnicom (OMC), all of which are indicating modestly higher openings this morning. On the other hand, investors were not impressed with quarterly financials from restaurant operator Domino’s Pizza (DPZ) and Citigroup (C), one of the nation’s largest banks, and these stocks are down slightly ahead of the bell. Investors were even more upset with Teradata (TDC), after the leader in enterprise data warehousing issued third-quarter guidance that fell short of expectations. The stock is down sharply in the premarket as a result. – 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 - It is still all about Washington, as President Obama and the leaders in Congress seek to work out their financial and philosophical differences to bring about both serious budget reform and an increase to the debt ceiling before we take the unprecedented step of  defaulting on our massive debt. It has been a struggle, to put it mildly, with hopes and despair alternating over the past several weeks. Finally, though, some movement appears to be in the works. We will now see if this cautious optimism is warranted.

Wall Street, to put it mildly, has been preoccupied with these twin issues for the past few weeks, a period that has seen exaggerated movements on an hourly, daily, and weekly basis in the U.S. equity market. And yesterday was just more of the same. To wit, after the news programs were brimming over on Sunday with members of Congress and assorted commentators taking to the air waves to attempt to justify their opposing positions, the equity futures sold off broadly on Sunday night, presaging a notably weaker opening yesterday morning.

And, as if on cue, when there were no late night breakthroughs, the stock market did open to the downside, by some 100 points in the Dow Jones Industrial Average in the early going. But when there was no subsequent sharp selling later in the morning, and the key averages stabilized, the buyers entered the fray, hesitantly at first, but then more definitively as the early afternoon unfolded. Indeed, by close to 2:00 PM (EDT), the equity market had stepped gingerly into the plus column. Then, as a number of government officials voiced optimism that a deal to finally end the two-week-long shutdown and raise the nation's borrowing limit could, in fact, be in the offing, the gains solidified, with the Dow, at one point, rising to a session gain of more than 70 points, before easing back slightly to close with a still-healthy rise of 64 points. The NASDAQ, too, was strong, gaining 23 points on the day, while advancing issues outdid falling stocks by a moderate degree. The reverse had held true earlier in the session.

Now, this morning, indications are that the Senate is optimistic that a deal can be achieved on their side. However, the more difficult task will be to get a thumbs up in the House, where the Republicans are in the majority, unlike the Senate, and a deal may be less certain. Overall, though, our sense continues to be that some accord will be reached before midnight on October 17th, and that an extension of the debt ceiling until February of 2014 will be a key aspect of that agreement.

Meanwhile, the market, as noted, has been talking a fairly upbeat view of things right along, refusing to take a wholly pessimistic view and selling off. Should such a debt extension not be secured and a default on our borrowing result, a major market drop would almost certainly ensue. Congress must be well aware of that and notwithstanding the often harsh rhetoric on both sides of the aisle and the seeming stubborn refusal to compromise, cooler heads should, in the end, prevail.                

In the meantime, there is other news and an absence of news, at the same time. In the former area, a number of large and small companies are now in the process of reporting their third-quarter reports, with no fewer than nine of the 30 Dow companies set to issue their financials in the coming four days. So far, the earnings news has been mixed; we would expect such a disparate pattern to persist.  As to the absence of news, the government shutdown is keeping reports on consumer prices, industrial production, and housing starts at bay this week.

Finally, after the nice comeback yesterday, the equity futures are presaging a mixed start to the trading day this morning, with the Standard and Poor's 500 Index futures off by some three points and the NASDAQ futures up by a like number of points. Bonds are falling, though, with the yield on the 10-year Treasury note up to 2.72%. – Harvey S. Katz

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