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After The Close - With a margin of victory that could rival that of the Seattle Seahawks’ lopsided defeat of the Denver Broncos in Super Bowl XLVIII, the bears overwhelmed the bulls on Wall Street today. The selling, which was at times pronounced during the month of January, carried over into February, but in a big way today. Pushing equities markedly lower was another batch of disappointing economic news, predominately from the manufacturing sector (more below). Overall, declining issues led advancers by a whopping margin on both the New York Stock Exchange and the NASDAQ.

The selling intensified as the day progressed and all of the major market averages were off considerably at the closing bell. Even the most defensive-oriented sectors were unable to avoid substantial losses. Not surprisingly, the more economically sensitive groups, including the industrial, energy, and consumer discretionary stocks, were the biggest laggards. The selling was broad based, as reflected in the very disappointing showing from the S&P 500 Index.  That broader index is now down more than 5% since its high on January 15th, which is clearly an indication that we are now very much moving in the direction of a correction for the domestic and, for that matter, world equity markets. Investors have become quite unnerved over the last fortnight of trading, with the S&P 500 Volatility Index (or VIX), also known as the “fear gauge,” jumping markedly, ending the session over 20 for the first time since late June.

As noted, driving stocks significantly lower was some disconcerting news on the U.S. economy. A half-hour into the trading session, the Institute for Supply Management, a Tempe, Arizona-based trade group, provided the biggest shock when it reported a sharp deceleration in manufacturing activity growth for the month of January. Specifically, the Manufacturing Index came in at 51.3, which was well below the consensus expectation of 56.0 and the December reading of 56.5. Not surprisingly, the ISM data pressured the stocks of the manufacturing companies, including shares of Dow 30 components 3M Company (MMM -Free 3M Stock Report) and United Technologies (UTX - Free United Technologies Stock Report), during today’s brutal trading session, which saw all of the stocks in the index of 30 bellwether companies, save for Pfizer (PFE), finish in negative territory and the overall index down more than 300 points. The NASDAQ, which was off more than 100 points, was done in by a very weak showing from the technology stocks, including those of industry giants Google (GOOG), Apple (AAPL), and Amazon.com (AMZN).

Meantime, investors were also not pleased to learn that auto sales, which were on a steady ascent for much of 2013, fell during the first month of this year. Severe winter weather in the Northeast for much of January was blamed for the sharp drop in auto sales at Ford Motor (F) and Toyota (TM)—each down 7% year over year—and General Motors (GM), where the retreat was a more notable 12%. Shares of each automaker finished in the red today.

In a nutshell, what we appear to be seeing right now are skittish investors unnerved by disappointing economic news, both here and abroad, and lackluster earnings results from Corporate America, further exacerbated by the growing reality that the equity market is losing the security blanket that the Federal Reserve was providing in recent years with its highly accommodative monetary policies. Our sense is that there is some recalibration of the market averages in play as investors now are focusing on fundamentals—which as noted above don’t look all that appealing right now—as opposed to what the Federal Reserve might do next to rescue both the stock market and the economy. In the meantime, until the dust settles from the latest selling, one place where traders are flocking to these days in a clear cut “flight-to-safety” strategy is the fixed-income markets. Bonds, which were out of favor in 2013, are rapidly becoming desired holdings for worried investors. In fact, the yield on the 10-year Treasury note, which moves in the opposite direction to the price, fell below 2.60% today for the first time since October 31st. - 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 U.S. market is trading sharply lower today, with the major averages now near their session lows. At past noon in New York, the Dow Jones Industrial Average is down 246 points; the broader S&P 500 Index is off 30 points; and the technology-heavy NASDAQ is lower by 80 points. Moreover, many of the mid-cap and smaller names are declining even more sharply, as the Russell 2000 is off 2.4%. Market breadth is decidedly negative, with declining issues outnumbering advancers by about four to one on the NYSE. All of the market sectors are in negative territory. However, there is some relative strength in the utility issues. Notably, the utilities have actually done well so far this year, as investors have been attracted to this group’s defensive qualities. Gold, too, has also been bucking the overall downtrend lately, and the precious metal is trading higher today.

Technically, stocks have been quite weak this year, with the S&P 500 down about 5%. Today’s move lower puts the broad index well below the 1,780 level, which had been an area of prior support. It also makes it unlikely the rally attempt mounted last week will be sustainable. If we move lower from here, the index may find support at its 200-day moving average, located at about 1,710. It should be noted that over the past few weeks, trading volumes have increased when the market has dropped, and has failed to keep up when it has advanced. This likely suggests some underlying weakness, and a generally negative bias. One can see this, as the VIX, now above 20, has moved steadily higher in the month of January. Elsewhere, the market has failed to react positively to the fourth-quarter earnings reports, and it seems that traders are more concerned with other forces, such as the emerging market turmoil, or the Fed’s stance.

In today’s economic news, the ISM Index for January came in at 51.3 down from 56.5 in December, and also below expectations of 56. Tomorrow, we get a look at factory orders for December.

The earnings news has been light this morning. Specifically, Sysco (SYY) issued lackluster results and that stock is a bit lower. After the close, we hear from Anadarko Petroleum (APC) and YUM! Brands (YUM).

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

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11:25 AM EST - The somber mood on Wall Street that continued throughout January is thus far extending into February, with the leading U.S. equity averages selling off broadly and dramatically this morning.

To wit, as we approach the two-hour mark in U.S. equity trading, we find that the leading averages are all sharply lower. For example, the Dow Jones Industrial Average is now off 202 points; the Standard and Poor's 500 Index is lower by 24 points, driving that index back toward the 1,750 support line; and the tech-laden NASDAQ is plunging by 63 points. Worse, the small-band mid-cap indexes are faring even more poorly on a percentage basis, with the S&P Mid-Cap 400 now off 31 points, or 2.4% and the small-cap Russell 2000 lower 16 points, or 1.4%.    

Behind this sharp further retreat are concerns about growth in China and now on our shores, as this morning the Institute for Supply Management reported that its gauge of manufacturing growth had slowed notably in January, easing back from a December reading of 56.5 to the latest month's 51.3. -Harvey S. Katz, CFA

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 SurveyIt’s Monday morning, and earnings are not flowing in at the break-neck speed they had been in recent days. However, there are some reports to be aware of. On the bright side, investors appear pleased with a quarterly update from nutritional supplement provider Herbalife (HLF), and that stock is up moderately in pre-market trading, as a result. On the other hand, shares of Sysco (SYY) are indicating a slightly lower opening after the company, which provides food for restaurants and other food-service companies, reported December-period results.

There is some news on the M&A front, as well. Notably, shares of ArthroCare (ARTC) are up nicely ahead of the bell after the medical supplies company agreed to be acquired by United Kingdom-based peer Smith & Nephew for $48.25 a share in cash. – 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 - If the old mantra about a down January being the harbinger of a down year is to be believed, then the bears will have their way in 2014. That is because after a strong comeback this past Thursday had given the bulls some slight hope for a late rush into positive territory for the month--at least on the NASDAQ, which entered the final trading day of the month off just 1.3%--a notable selloff in Europe earlier that morning (largely on sudden deflation fears) and in our futures just before the open, managed to quickly dash those brief hopes.

And on cue, those early indicators, which largely reflected concerns about the health of the emerging economies, and in particular their equity, bond, and currency markets, were right on target, as our market began the session notably to the downside, with the Dow Jones Industrial Average tumbling by 225 points within minutes of the open. In fact, the market would have been even deeper in the red, especially on the S&P 500 and the NASDAQ had it not been for an outsized gain in Google (GOOG), where shareholders benefited from a solid revenue performance in the latest quarter.    

Indeed, with the increasingly frenetic nature of our stock market in evidence, especially late in the month, it was not that surprising that the bargain hunters stepped back into the fray for a time, even managing to briefly take the NASDAQ just into positive territory, and almost managing to do the same for the S&P 500 Index. However, when the Dow Jones Industrials didn't threaten such a full comeback, the market gave back much of this turnaround late in the session, to close soundly lower, albeit still well off of the worst levels of the session. It would seem that investors did not want to be long the market over a weekend, and what some might fear could well be additional worrisome tidings out of the suddenly troubled global scene.

Meanwhile, with these final session losses, which totaled 150 points on the Dow, 12 points on the S&P 500 Index, and 19 points on the tech-laden NASDAQ, all of the major indexes ended the month in the minus column. On point, the Dow showed a 5.3% loss for the opening month of the year; the S&P 500 was off 3.6%; and the NASDAQ was in the loss column to the tune of 1.7%. Of course, a lower January does not necessarily mean a lower year, and we still think the bulls have plenty going for them--notably a modestly better economic outlook for the year. Still, the January barometer has worked about three-quarters of the time, most recently in 2013 when a strong start to the year continued through the full 12 months. 

As to influences on our shores, the economic beat was mixed, with data showing a dip in the University of Michigan's Consumer Sentiment Index, a flat reading in December personal income, a slightly lesser growth rate in Chicago-area manufacturing, but a stronger-than-forecast gain in personal consumption expenditures during the final month of 2013.

Meantime, as we look out to a new week, the economic calendar is full and likely pivotal to the performance of the economy in the days ahead. Of note here, is this morning's scheduled report on U.S. manufacturing activity, which comes out at 10:00 (EST). Then, on Wednesday, the same Institute for Supply Management, which puts out this morning's data on manufacturing, will issue the companion report for January on non-manufacturing activity. But the real headline grabber is this Friday's scheduled issuance on non-farm payrolls and the unemployment rate. Expectations here are that the nation added just over 180,000 jobs last month, while the unemployment rate is projected to have fallen from 6.7% to 6.6% for the latest month.

Now, as we look out to a new week, and in addition to such prospective tidings on the economy, we are also due to get a good number of corporate earnings reports. Those issuances are likely to have a sizable impact on the performance of our markets. Then, there is the overseas situation, which looks increasingly troubled in the emerging markets sector.

As to the developed nations, we have seen a further downtick in Asia overnight, where Japan's Nikkei 225 was especially weak. Of note here, that nation's market is now officially in a correction having dropped by more than 10% thus far this year. As to Europe, the bourses there also are mostly lower this morning. However, our market, after some earlier weakness in the futures has turned up modestly. And with just a few minutes to go before the open, we are looking for a mostly higher start to the upcoming session, as Wall Street attempts to turn a suddenly struggling ship around.   - Harvey S. Katz       

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