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After The Close - The second trading day of the new year and the final session of this holiday-shortened week on Wall Street proved to be an uneven one for investors. After yesterday’s selling, the major U.S. equity indexes started today to the upside, then eased back toward the neutral line midday through the session, before regrouping a bit later in the day, helped for a time by comments from Federal Reserve Chairman Ben Bernanke (see below). The Dow Jones Industrial Average fared relatively better than the other large-cap indexes, but it was the S&P Mid-Cap 400 Index and the small-cap Russell 2000 that did the best from a percentage standpoint. Meanwhile, on the large-cap end,  S&P 500 Index eased just a tad, while the NASDAQ was not able to erase the red ink, finally closing down 11 points. Overall, advancing issues led decliners on both the Big Board and the NASDAQ. That said, investors also should note the drop in market volatility today, which could be a sign of some continued complacency among traders, which, at times, is seen ahead of a change in market sentiment.

From a sector perspective, there seemed to be some rotation in play among the 10 major groups. There was leadership from the healthcare, industrial, and financial sectors. The industrial stocks, in particular, seemed to be helped by yesterday’s encouraging report on manufacturing activity from the Institute for Supply Management, a Tempe, Arizona-based trade group. Conversely, the energy stocks were not in favor, most likely hurt by the decline in crude oil prices today. It should also be noted that trading of utilities and telecommunications stocks were sluggish, likely prompted by the recent rise in yields on fixed-income vehicles. The higher rates on bonds make them more attractive and safer investment alternatives for accounts stressing income. 

The day did bring some news on the economy and from the corporate world. Of note, after trading commenced stateside, we learned that auto sales had eased some in the month of December from the brisk pace earlier in the year. That news made for a mixed showing for the stocks of the automakers. Specifically, shares of General Motors (GM) and Toyota Motors (TM) were lower as those two industry giants reported a decline in monthly sales, while the stock of industry peer Ford Motor finished slight higher after posting a modest increase in sales. Then…

This afternoon, the economy took center stage as outgoing Federal Reserve Chairman Ben Bernanke gave his final speech on monetary policy in Philadelphia. Mr. Bernanke reiterated that the economy has made considerable progress since the last recession, but that more work needs to be done, citing the still-high unemployment rate of 7.0%. (Note: We will get data on December nonfarm payrolls next week.) Chairman Bernanke said that he fully anticipates that the central bank will keep its highly accommodative monetary policies in place until more progress is made on the employment front. Our sense is that his words gave a slight mid-afternoon boost to stocks. The Federal Reserve’s loose monetary policies have played a huge part in the bull run of the last four years.

Looking ahead to next week, we sense that the direction of trading may be driven once again by news on the economy. In addition to the aforementioned report on employment and unemployment, which can often be a game changer for equity market participants, we will receive the latest data on nonmanufacturing activity and manufacturers’ shipments, inventories, and orders.   - 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 EST - The stock market has turned mixed as we pass the noon hour on a snowy day in New York, after a nice rise earlier today.  To wit, the Dow Jones Industrial Average is now up just 13 points; the broader S&P 500 Index is currently almost off two points; and the technology-heavy NASDAQ is down 15 points. Market breadth shows a lack of direction to the session, as advancing stocks are just about even with decliners. Also, the various market sectors point to a somewhat uneven performance. The financial names are showing some leadership, as the bank stocks are higher. The industrials are also making progress, thanks to strength in some of the aerospace names. Further, the healthcare issues, which held up well yesterday, are advancing, with gains in the pharmaceutical stocks. In contrast, the energy issues are declining again. Notably, the price of the crude oil is trading lower today, to just under $95 a barrel in New York. The technology stocks, too, are an area of weakness today, which underscores the poor showing thus far in the NASDAQ.

Technically, traders are likely looking for some direction, as we start 2014. The S&P 500 Index slipped a bit yesterday. However, it should be noted that volumes are still weak, as many traders and institutional investors are still on a holiday schedule. Further, the adverse weather in the Northeast may be keeping some traders on the sidelines. Things should pick up early next week, when, hopefully the traders and some better weather return. Meanwhile, sentiment appears to be neutral, as the VIX is trading just slightly lower at 14.18.

Elsewhere, it is shaping up to be a light day for economic news, with a report on auto sales being the only notable item. Next week, however, things pick up a bit. Of note, here, November factory orders and the December ISM Non-manufacturing Index are due out on Monday. Later in the week, the employment situation will be the center of attention, as the first ADP employment report will be released on Wednesday, then weekly jobless claims are due out on Thursday, and finally the Labor Department's monthly employment report and the unemployment figures for December are scheduled to be issued on Friday morning. That is normally the headline release of the month.

In the corporate arena, there were very few earnings reports released this morning. However, shares of Micron (MU) and Sprint (S) are both moving lower on “Wall Street” downgrades. Nonetheless, things won’t stay quiet for long, as the fourth-quarter earnings season is set to begin in a few days. This batch of reports will be important to watch, as many companies should be providing full-year guidance for 2014, along with their latest quarterly metrics. - 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 light again today, and trading volumes are likely to be low, as many investors are still on vacation and others have been stymied by the snow storm that has blanketed the Northeast. The auto sector is one to keep an eye on, however, as companies such as Ford (F), Toyota (TM), and General Motors (GM) are set to release sales figures for the month of December today. All of these stocks are up slightly in the premarket. – 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 - Wall Street sailed into the new year on a bullish high, having come through a 12-month stretch in which the Dow Jones Industrial Average had set 52 all-time closing highs and the Standard and Poor's 500 Index had turned in this noteworthy feat 44 times. But right from the start yesterday, there was little likelihood that either of these venerable indexes would add to this impressive record.

Indeed, after stocks had generally tracked lower in Asia and woven a notably weaker path in Europe during the morning hours, our market opened the first trading day of 2014 on a soft note, and stocks fell from there, pressing downward throughout the session. There was no major catalyst for this moderate reversal in an overbought equity market, save for disappointing manufacturing data out of China earlier in the day. However, stocks were due for a correction. Indeed, following modest window dressing last week, which further built up many positions among the institutions, the start of a new trading year apparently was used for an unwinding of these stakes.   

On point, the Dow Jones Industrial Average, off in triple digits for most of the day, closed down by 135 points, even as this blue chip index managed to modestly pare its worst declines late in the session; the aforementioned Standard and Poor's 500 Index shed 16 points; and the NASDAQ, which is still some thousand points from its all-time highs, fell 34 points. The small- and mid-cap indexes did a little worse, attesting to the fairly broad nature of the initial 2014 selloff. 

As to other influences yesterday, the Labor Department reported a slight drop in weekly jobless claims, an encouraging result that seems to further confirm the now-steady improvement in the nation's job-making sector. Then, some 90 minutes later, the Institute for Supply Management, the Tempe, Arizona-based trade group, reported that manufacturing activity had held steady in December, as it came in at a reading of 57.0. That was just nominally below November's 57.3 score, and was the second best result of 2013. Moreover, new orders, a forward-looking component of the manufacturing survey, improved sharply in the month, and that was certainly encouraging. Such data, along with other recent releases, now suggest that growth in the just-ended three months might well have come in at 2.5%, or so. That is notably better than we had looked for as recently as a few weeks ago. In fact, we would not be surprised to see some economic forecasts perk up a little in the days and weeks to come. The first look at fourth-quarter GDP figures are due out late this month.  

As to the first trading day of the year, a number of groups that had struggled during the year, such as the precious metals sector, saw some healthy opening-session buying, sparked by group rotation, as well as a positive reaction to a nice rebound in gold prices. How long that recovery will go on is unknown at this point, as the economic and inflation fundamentals do not look very compelling for the metal. Elsewhere, oil fell yesterday, and that setback helped pummel some energy issues on the day. The tech sector also wilted in this early dose of 2014 profit taking.

Looking ahead, the holiday-shortened week will now conclude today with December vehicle sales, which are forecast to be strong. The employment report, which normally is issued on the first Friday of a new month, will be out next Friday, due to the Christmas and New Year's Day breaks, which pushed data collection out a bit further. We would expect another reasonably good result when this critical metric is issued late next week. 

Meanwhile, following yesterday's selloff in New York and some less-than-welcoming results in Asia overnight today, the key bourses on the Continent are tracking higher thus far this morning. On our shores, the equity futures are following up yesterday's decline with a modest move higher. Specifically, the S&P 500 futures are better by four points and the NASDAQ futures are ahead by nearly five points. Finally, oil is slightly lower; gold is a bit higher; and Treasury yields, which eased yesterday, are nominally higher again, with the 10-year note climbing back to 3.00%. - Harvey S. Katz

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