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After The Close - U.S. stocks were mixed on Wednesday, with the S&P 500 starting the day well in positive territory before the broad-based index shed value as the day wore on. The Dow Jones Industrial Average was the biggest laggard on the day, while the tech-laden NASDAQ was the most resilient large-cap grouping. The former was dragged down mostly by International Business Machines (IBM - Free IBM Stock Report), which reported a wide top-line decline in its quarterly report. Breadth was largely even at the closing bell, aided in no small part by a bullish tone amongst small- and mid-cap equities.

Since late last week, the main influence over trading has been quarterly earnings. And generally speaking, the results have been encouraging so far. Save for the occasional large-cap disappointment, like IBM today and yesterday’s surprising miss from banking giant Goldman Sachs (GS - Free Goldman Sachs Stock Report), profit gains from Corporate America have added some much-needed optimism to the market. Wednesday saw healthcare and financial stocks tick higher on solid quarterly updates. Still, with geopolitical tensions causing headlines, and the timing of the Trump Administration’s plans to implement tax and regulatory reform yet uncertain, sustained bottom-line gains on the earnings front will go a long way in reinvigorating growth on the stock exchange.

Meanwhile, the mid-afternoon release of the Federal Reserve’s Beige Book economic summation was largely favorable. All 12 of the central bank’s branches reported modest-to-moderate growth. Thus, investors can still expect the Fed to raise interest rates in the coming months. In all likelihood, the next hike will come in mid-June. We think developments from Washington and Corporate America seem to have been bigger factors in trading today. Moreover, a nearly 4% slide in U.S. crude barrel prices have weighed heavily on many issues.

The final hour saw the bears take over large-cap trading. The S&P 500 slipped deeper into negative territory and the Dow bottomed out 135 points lower than its closing price on Tuesday. Even the NASDAQ, which enjoyed solid gains throughout most of the day’s trade, saw its value slide closer to the breakeven line in tandem with the late-afternoon selloff. It will evidently take some combination of positive earnings data and clarity on economic policies to spur a widespread, sustained return to the post-election buying environment. Until then, the tug of war will likely persist.   - Robert Harrington

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

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11:40 AM EDT - The U.S. equity market is putting together a solid performance this morning, with mostly positive earnings news from Corporate America emboldening the bulls. The NASDAQ and the broader S&P 500 Index were nicely higher from the start and they are holding onto their initial gains as we move toward the midday hour on the East Coast. They were briefly joined in positive territory by the Dow Jones Industrial Average, but the index of 30 bellwether companies is being held back by a weak showing from the stock of International Business Machines (IBM Free IBM Stock Report), which is sharply lower following the company’s disappointing quarterly results (more below).

There is underlying strength in the market today, as small- and mid-cap sectors are also doing well, with the Russell 2000 and the S&P Mid-Cap 400 producing the day’s biggest percentage gains among the major equity averages. There also is a plurality of advancing issues on both the New York Stock Exchange and the NASDAQ, and most of the 10 major equity groups are trading in the black.

From a sector perspective, the leadership is coming from the financial consumer cyclical, and industrial groups. Conversely, the energy, utilities, and consumer staples stocks are out of favor. The sector rotation is being mostly driven by earnings news, but in the case of today’s laggards, the rise in fixed-income yields also is contributing to the sluggishness.

As noted above, the primary catalyst behind today’s selective buying is earnings data. For the most part, the news has been positive. The highlights include strong quarterly reports from Morgan Stanley (MS), Intuitive Surgical (ISRG), and Lam Research (LRCX). Conversely, IBM shares are trading lower and have been the main drag on the Dow 30 today. Investors are reacting negatively to a bigger-than-expected top-line decline for the technology giant. Investors should note that American Express (AXP Free American Express Stock Report), eBay (EBAY), and Qualcomm (QCOM) are scheduled to report results after the market closes.

Meantime, the investment community’s attention may shift some to the U.S. economy this afternoon when the Federal Reserve releases its latest Beige Book summation of economic conditions. That survey may provide more clues as to what the central bank may do with regard to monetary policy in the coming months. Yesterday, the news from the business beat was mixed, with uneven reports on industrial production and housing starts headlining the data.

Looking ahead to the second half of the trading session, market fundamentals suggest that the bulls, armed with strong earnings news, will be tough to beat today. Our sense is that the Fed’s Beige Book report will not provoke much of a response from traders that are clearly focused on earnings right now. Stay tuned. -  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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Before The Bell - After faltering notably over the final three days last week on global and earnings concerns, the stock market broke strongly to the upside on Monday, with the Dow Jones Industrial Average soaring by better than 180 points on the day. Lessening concerns on these twin issues namely international events and the profit reporting calendar, sent stocks broadly and decisively to the upside in dealings. Indeed, it was a wire-to-wire win for the bulls, who needed a lift following the weakness of the prior few sessions.

However, if the bulls thought a new trend would be developing early this week, their optimism certainly was poorly placed. That is because the start of earnings season for the recently concluded first quarter was anything but a fulfilling one for the equity market optimists. On point, financial services behemoth and Dow component Goldman Sachs (GS - Free Goldman Sachs Stock Report) missed its results across the board, and that stock retreated materially yesterday, as did health care giant Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report), which posted no better than mixed financials. 

So, stocks, instead of continuing the prior session's heroics, wilted badly. In fact, by lunch time, the Dow had just about given back the previous day's large gains, principally on sharp reversals in the aforementioned Goldman Sachs and JNJ. The other large-cap averages also were weaker, as was the small-cap Russell 2000, which shed more than half a percentage point. In all, the tone of Tuesday's batch of corporate data was mostly disappointing. And that is worrisome, as expectations going into reporting season were so high.

Of course, the disquieting notes from Goldman and Johnson & Johnson were just two instances, and nearly all of the earnings season is yet to unfold. And much can change. Still, this will become a concern should a weak trend develop. Also of note, March industrial output figures were released yesterday morning and the uptick met expectations. Conversely, housing starts fell in March, posting a drop that exceeded expectations, but building permits, a more forward-looking metric, rose. Then, there is North Korea and the threat that nation poses.

Thus, stocks entered the afternoon hours under some pressure. In truth, not only was it earnings and North Korea, but France is holding the opening round of its Presidential election amid contentious issues, while Great Britain's Prime Minister Theresa May indicates she wants to hold elections well before the expected date. The London FTSE 100 fell sharply early yesterday morning in response. Meanwhile, our market remained lower through the middle and late afternoon, albeit well off of its late-morning lows on those myriad concerns.

As we entered the home stretch, the market stayed weak, with the Dow continuing to register a low-triple-digit loss. At the close, the 30-stock Dow Jones Industrial Average was lower by 114 points; the S&P 500 Index was off by seven points; and the NASDAQ, once in the minus column by almost 30 points, ended off by just over seven points. Meanwhile, the Russell 2000, earlier down sharply, actually nudged up by less than a point. What did stay notably weaker were Goldman and JNJ, each of which ended matters near their respective session lows.    

Looking ahead to a new day now, we see that stocks were off a bit in Asia overnight, while the principal bourses are trading in uneven fashion in Europe on political concerns. Oil, meantime, after falling yesterday is nudging slightly higher and Treasury yields, off again yesterday, are narrowly higher so far this morning. As to our equity futures, following the modest declines in the most recent session, they are higher thus far today. Going forward, the biggest issue in the near term will be earnings, and here IBM (IBM - Free IBM Stock Report) has disappointed this morning on both the top and bottom lines. So, there could well be some pressure on this front. Stray tuned.   - Harvey S. Katz

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