After The Close -  It was a difficult week for those investors long equities. The biggest damage was inflicted yesterday, with all of the major U.S. equity indexes recording outsized losses. Those setbacks, along with the bulls’ inability to make headway today, resulted in respective five-day losses of 2.3%, 2.1%, and 2.0% for the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index. What predominately pushed the major averages lower—it also was a disappointing five-day stretch for the small-cap Russell 2000 and the S&P Mid-Cap 400 Index, notwithstanding small advances for the two indexes today —were escalating geopolitical concerns in Eastern Europe and weaker-than-expected trade data from China this week (more on both topics below).

As far as today goes, there was a mild rally by the bulls at the start of the session, but as the day progressed, the initial positive sentiment began to wane, at least in the large-cap market, and we ended up with a mixed performance for equities. The small- and mid-cap stocks fared better than the larger cap issues. For the most part, investors, much like the rest of the week, were unnerved by the aforementioned international worries. At the closing bell, the Dow 30, the NASDAQ, and the S&P 500 Index were in the red near session lows, and the spread between advancing and declining issues narrowed considerably on both the Big Board and the NASDAQ.     

The escalating tensions between Ukraine and Russia were a real thorn in the side of traders this week—and unfortunately there was little diplomatic progress made toward quelling those concerns heading into the weekend. Ukraine’s prime minister warned the United Nation’s Security Council yesterday that Russia had carried out “military aggression” in Crimea. The situation, which remains a hot-button topic on Wall Street, will probably have a big impact on trading at the start of next week, as the public in Crimea will vote on Sunday whether to break from Ukraine and become part of Russia. The United States weighed in on the situation this afternoon, releasing a statement saying it was very disappointed that Russia has not done more to defuse the growing tension in the region and will provide a quick response to Sunday’s referendum in Crimea.

Investors also have China to be worried about these days. The data of late from the world’s second-largest economy has been less than stellar and has unnerved investors that think—and rightfully so given that China is no longer a pure emerging market given its six trillion-dollar economy—China’s slowing pace of economic growth will have far-reaching consequences. The trading week began with disappointing trade data from China and ended with news of a sharp reduction in industrial production. In fact, China’s industrial production rose by its slowest rate in five years in February. Investors were also not happy to hear China’s Premier Li Keqiang outlined “serious challenges” ahead for Asia’s powerhouse. The China economic data weighed on both global equities and commodities.

The international news received the lion’s share of the investment community’s attention this week, as there was little domestic news of note both on the corporate and business beats. However, that will change drastically next week with a slew of economic reports due, including data on industrial production (Monday), housing starts (Tuesday), and existing home sales (Wednesday). Investors will also be paying close attention to what the Federal Reserve has to stay on Wednesday afternoon after the conclusion of its two-day monetary policy meeting. Thus, even with first-quarter earnings season still about three weeks away, investors will have no shortage of news to run with next week. - William G. Ferguson

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


12:15 PM EDT - The U.S. stock market attempted to rally earlier this morning, retreated after an hour, and is now firming up. At just past noon in New York, the major averages are all back in positive territory. The Dow Jones Industrial Average is up 23 points; the broader S&P 500 Index is ahead two points; and the technology-heavy NASDAQ is higher by two points. Market breadth still suggests a slightly favorable bias to the session, as advancing stocks are just ahead of decliners on the NYSE. There are a few market sectors trading higher. Specifically, the energy stocks are ahead, thanks to gains in the exploration and production names. The basic materials issues are also advancing, as the mining issues continue to make strides. However, there is considerable weakness in the financial stocks. Also, the technology issues are selectively weak.

Technically, aside from a sharp one-day advance at the beginning of the month, stocks have failed to move notably higher in March. Moreover, yesterday we saw the market decline considerably. The fact that this move lower was accompanied by heavy trading volumes was also cause for concern. While the bulls do seem fatigued, they have shown remarkable resilience in the past, so they probably should not be counted out, just yet. Meanwhile, if the bears manage to gain control, and the market does head a bit lower, the S&P 500 may find support at the 1,830 level, which corresponds to its 50-day moving average. Traders are feeling apprehensive, pushing the VIX past 16.50.

Investors received a couple of economic reports this morning, but the results were uneventful. Notably, producer prices declined 0.1% in February, where many analysts had been looking for an increase. The current showing suggests that costs remain reasonable for many businesses, and that inflation is not likely an issue. However, the University of Michigan’s initial reading on consumer sentiment came in at 79.9 in March, a bit lower than many had expected.

We also received a few earnings reports to review. Last night, we heard from Ulta Salon (ULTA). That stock is trading higher, as the beauty supply retailer put out stronger-than-expected figures. However, today, we heard from Aeropostale (ARO). That stock is off, as that apparel company issued disappointing figures and a weak outlook. - Adam Rosner

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 Survey Investors are digesting several earnings reports this morning, with the biggest disappointment coming from teen apparel and accessories retailer Aeropostale (ARO). Indeed, that stock is plunging ahead of the bell, after the company delivered dismal January-period results and offered a bleak outlook for the April quarter. Other stocks moving lower in the premarket on earnings related news include sporting goods retailer Hibbett Sports (HIBB) and packaged foods company General Mills (GIS).

The news was not all bad, however, and shares of cosmetics retailer Ulta Salon (ULTA) are indicating a nicely higher opening this morning, thanks to its solid January-period financials. Shares of apparel and accessories sellers ANN INC. (ANN) and The Buckle (BKE), as well as Zumiez (ZUMZ), a retailer of action-sports related clothing and equipment, are also up just slightly ahead of the bell on earnings. – 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 - After meandering through a trio of half-hearted selloffs on Monday, Tuesday, and Wednesday of this week, the U.S. equity market encountered some more serious selling yesterday. In fact, following a nominally higher opening on a pair of better-than-expected economic reports at home (see below), the bears really took over and drove stocks relentlessly lower over the remainder of the session. The losses were large and the market closed generally near the session lows. 

Behind this sharp reversal, apparently, were heightened concerns about the deteriorating conflict between Russia and Ukraine and further signs that economic growth in China may be softening more than had been expected. Add in concerns about valuations after the long bullish run, and the bears would seem to have some talking points. And, for one day, at least, they did.

Thus, stocks sold off across the board yesterday, with the final numbers showing that the Dow Jones Industrial Average had given back an eye-catching 231 points; the NASDAQ, hurt by selective reversals in the technology space, was lower by 63 points; and the Standard and Poor's 500 Index was in the red to the tune of 22 points. Most of the key sectors were lower, save for the gold stocks, which fared relatively well, as skittishness rose, along with metals prices. Gold is a tad lower this morning, however.

Yesterday's meltdown was in stark contrast to the resilience shown by Wall Street since the crisis in Ukraine unfolded. It seems that for one day, at least, that situation did not look as far away as earlier hoped. Also, one day after a report showed deterioration on China's export front, fresh data indicated that the world's second largest economy had seen a slowdown in industrial production in the January-February period, while retail sales eased in January. The fact that China's Premier Li Keqiang said that he was confident that his nation would meet its 7.5% growth goal this year had little effect.

This economic news, meantime, was much less dour on our shores, as reports yesterday morning affirmed that retail sales had risen by 0.3% last month; a lesser gain had been the forecast. However, the January decline was revised to show a steeper fall. Also, at the same time, the Labor Department issued data showing that first-time jobless claims had fallen by 9,000 in the latest seven-day period, to 315,000. Those better metrics helped to embolden the bulls for a brief span. But the worrisome trends overseas could not salvage the day for those long equities, as the above figure attest.                   

So, here we are, as the final day of the trading week arrives. It is too early to mention the possibility of a correction, as the selloff to date is still contained. But there is no denying that valuations are rich and the news, especially off shore, is not compelling for the bulls. Moreover, we are approaching the spring, and the period from April-to-June, in particular the month of May, has seen the start of some notable stock market reversals. So, there are some logical concerns. And, we add, first-quarter earnings expectations have come down in recent weeks.

That said, it is also true that there are few attractive investment alternatives to stocks in this low-inflation, low interest-rate setting. So, it is quite possible that this latest market reversal could be short-lived as have been most others during this long bull market.

As to the final session of the week, the markets were lower overnight in Asia, likely taking their cue from the sharp selloff yesterday over here, while they are now pressing downward in Europe this morning. Meanwhile, over here, following some earlier buying in the futures, those indicators have started to point a little lower with less than an hour to go before the start of the final trading session this week, presaging a possible weaker start. 

Finally, in data just issued, the Labor Department reported that the Producer Price Index, the closely tracked gauge of wholesale price movement, fell by 0.1% in February, which was a better inflation result than expected. A gain of 0.2% was the forecast. And, if we back out the volatile food and energy components, to get the so-called core PPI reading, we find that such prices eased by 0.2% last month. A flat-to-nominally higher core PPI had been expected. The futures eased a bit further on this news, as the results may again be stoking concerns about deflation. - Harvey S. Katz

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