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After The Close - On a day in which investors received a good deal of news on the economy, most of them decided to sit on their hands instead of taking any more sizable positions. We think the complacency—and subsequent low volatility—was the product of some hesitancy on the part of traders ahead of this week’s much-anticipated report on the labor market on Friday, which at times can be a game changer for the market. Still, the major equity indexes were able to press modestly higher, with the technology issues—particularly those of the computer hardware and semiconductor equipment companies—helping the NASDAQ record the biggest percentage gain. The advances for the Dow Jones Industrial Average and the broader S&P 500 Index, which are trading at or near all-time highs, were a bit more subdued. The spread between advancing and declining issues was razor thin on both the Big Board and the NASDAQ.

As noted, the investment community’s attention was clearly focused on the business beat—and the results on that front were mostly mixed. Before the market opened, we received a disappointing report from payroll processing giant Automatic Data Processing (ADP) that showed far fewer than expected private sectors jobs were created in May; it also marked the worst monthly showing in 2014. Then a few minutes later, we learned that the U.S. trade gap widened in April, with exports falling and imports rising. That reading was mixed, as while the deficit widened, investors could take some comfort that consumers are spending, which is important to the economy. Speaking of the consumer, a half-hour into the trading day, the Institute for Supply Management reported that nonmanufacturing activity expanded at a healthy pace last month. Then at 2:00 P.M. EDT, the Federal Reserve released its latest Beige Book summation of economic conditions, which provided few  surprises. The lead bank noted that the economy is growing at a “modest to moderate” pace.

From a sector perspective, there were far more up arrows among the top-10 groups. Not surprisingly, some leadership came from the consumer discretionary stocks, on the heels of the aforementioned reports showing some strength in the consumer sector. The technology issues, as noted above, also finished the session modestly to the upside. Conversely, there was some profit taking in the energy and more-defensive areas. In the energy space, the stocks of the oil and gas companies were under pressure, while the selling in the latter area was not overly surprising, as the S&P 500 Volatility Index (or VIX), also known as the “fear gauge” remains at very low levels, suggesting that investors are not shying away from risk.

All in all, the central theme among pundits is that today’s stock market activity is being driven by the central bank’s monetary policies. The accommodative policies, which have now been in place for several years, are keeping interest rates near historic lows, and thus making for fewer attractive alternatives for investors. We expect this theme to be in play once again tomorrow, as the prevailing thought is that the European Central Bank (ECB) will announce some type of stimulus measures following the conclusion of its monetary policy meeting. In recent interviews, ECB President Mario Draghi has hinted at such actions by the Continent’s lead bank. Meantime, it will be a quiet day on the economy stateside, which may lead to some more complacency ahead of Friday’s report on employment and unemployment for the month of May. - William 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 got off to a weak start this morning, but is now firming up. In fact, at just past noon in New York the major averages are all in positive territory. The Dow Jones Industrial Average is up three points; the broader S&P 500 Index is ahead three points; and the NASDAQ, which is showing leadership, is gaining 17 points. Market breadth is uninspiring, as advancing stocks are about even with decliners on the NYSE. Still, most of the market sectors are making progress. There is strength in the consumer names. The technology issues, too, are gaining. Nonetheless, the energy issues are quite weak today. Further, the utilities are trading lower.

Overall, the broader stock market has been strengthening lately, after being locked in a trading range earlier this year. Investors are still largely buying the larger well-established names. Notably, there are now 112 stocks hitting new highs on the NYSE, versus 17 at new lows. These figures are encouraging and show improvement. However, the numbers are not as upbeat on the NASDAQ, as that technology index is still lagging. This likely suggests some caution on the part of traders.

The economic news released morning was largely mixed. Some reports were mildly disappointing. Specifically, the ADP Employment Change Report for the month showed 179,000 jobs added to the private sector in the month of May. This result was a bit below expectations. We will get a better look at the employment situation tomorrow, as the weekly initial jobless claims are due out. Then, on Friday the government’s employment report for May will be released. Meanwhile, the nation’s trade balance has been eroding, as the deficit widened to $47.2 billion in April. However, there was some good news. Notably, the ISM Non-manufacturing Index rose to 56.3 in May, which was better than had been anticipated.

In the corporate area, TIBCO Software (TIBX) stock is trading lower as that company issued weak guidance. However, Protective Life (PL) shares are soaring, as the life insurer has agreed to be acquired by a Japan-based company. - 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 SurveyEarnings reports continue to trickle in. Results were mixed, as investors took issue with quarterly releases and/or outlooks from apparel and accessories seller Ascena Retail Group (ASNA) and government services contractor Leidos Holdings (LDOS), but appeared pleased with April-period financials from wine and spirits company Brown-Forman (BF/B). Consequently, ASNA and LDOS are indicating moderately lower openings this morning, while Brown-Forman shares are moving modestly higher ahead of the bell. The biggest surprise, however, came from TIBCO Software (TIBX), which issued May-period guidance that fell well short of investors’ expectations. Shares of the e-commerce company are down sharply in the premarket, as a result. 

Elsewhere, on the M&A front, the stock of Protective Life (PL) is up sharply in pre-market trading, after the insurer agreed to be acquired by Japan-based Dai-ichi Life for $70 a share, or roughly $5.7 billion. News reports on Monday June 2nd indicated that the companies were in discussions about a potential deal. – 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, fresh off a succession of all-time highs in the Dow Jones Industrial Average and the Standard and Poor's 500 Index, meandered back and forth yesterday, with most of the action taking place on the losing side of the ledger, before stocks took one last attempt at a bullish stand in the mid-to-late afternoon. However, after approaching the breakeven point with about an hour to go, stocks failed to hold that modicum of momentum and eased back somewhat over that final hour. Still, there was no decisive selling and the bears, who have been starved for any good news lately, could take little solace from this very half-hearted equity market retracement. All told, the Dow Jones Industrial Average dipped 21 points and the S&P 500 was essentially flat; meanwhile, there were more losing stocks than gaining issues on both the Big Board and the NASDAQ for the second day running.

The market, it would seem, is now caught between the desire of the bulls to push stocks higher and the realization that as they do strengthen, valuations also climb and the risks grow. However, psychologically, the mood would appear to be constructive. After all, the nation's economy is cooperating, and May, often a bearish month for stocks, was anything but that this year, with modest gains being the rule.

As to the economy, after Monday's report of an additional increase in manufacturing activity in May, we saw data issued yesterday, which affirmed that factory orders had moved a bit higher in April, gaining 0.7% for the month; an increase of 0.6% had been the prevailing forecast. Also, the big automakers released their car sales for May, and the results were impressive, with General Motors (GM) posting a solid 12.6% rise, while competitor Ford Motors (F) chimed in with a gain of 3.0%. Both stocks edged a bit higher.

As to individual groups, gold posted its first improvement in some seven sessions. But the small increase was hardly inspiring and some metals providers saw their shares drop further early yesterday, before bargain hunting gave the group a mixed look later in the day. The steelmakers, meantime, were mostly lower, led into the minus column by the iron ore factor Cliffs Natural Resources (CLF), which set a new 52-week low. But there was selective buying in the technology group, although the NASDAQ, where many in this latter category are domiciled, was a bit lower on the day, falling three points. Also, the banks were mixed to a little higher in this generally uninspiring session, while a number of the larger pharmaceuticals makers pressed slightly lower on the day. Bonds, meantime, also weakened with yields climbing a little. 

Now, the trading week heats up, with data just issued on the trade gap, which widened further in April, as had been forecast (more below), and later this morning, the Institute for Supply Management is due to report its May results on nonmanufacturing activity. A flattish month-to-month reading is the expectation. However, the report is forecast to show continued overall growth. On Monday, the ISM had released the companion survey on manufacturing. It, too, indicated that such activity remained securely on the rise last month. Then, on Friday, the Labor Department will release the latest results on job creation and the unemployment rate. Both surveys will be for May and can be stock market movers, especially the non-farm payroll result. Expectations are that the nation added 215,000 positions last month. In April, there were 288,000 jobs created. In a preview of this report, ADP (ADP) has issued its private-sector payroll report and that metric showed a May jobs increase of 179,000; a gain of 210,000 had been the forecast.   

As to the trade gap for April, the Commerce Department reported that our nation had a shortfall of $47.2 billion for the most recent month, which was up notably from the $44.2 billion deficit tallied in March. Within this aggregate report, we saw that exports eased by $0.3 billion from March, while April imports were $2.7 billion more than March imports. In all, this was the widest trade deficit in two years, or since April of 2012, when the gap was $47.8 billion.

Looking at the markets so far today, as we peer out overseas, we find that stocks were choppy in Asia overnight with no notable direction. The story is much the same in Europe. On our shores, however, our futures are pressing lower, with the disappointing ADP data and the eroding international trade outlook widening the losses somewhat, and likely setting up a softer opening for Wall Street in less than an hour from now. - Harvey S. Katz

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