Stocks rallied right out of the gate as investors welcomed a rebound in Chinese manufacturing and an unexpectedly strong report on U.S. manufacturing activity. The rally was broad-based. Apple was up 2.8% as the company held its annual music-themed special event. The focus shifts to jobs this morning when the government’s report on initial claims comes out. Investors will also take in the latest readings on factory orders and pending home sales.
FEAR METER: The S&P500 implied volatility plunged as recovery fears faded away.

Stocks were supported earlier in the session by a larger-than-expected rise in consumer confidence and a jump in U.S. home prices. But the tone turned bearish as investors weighed meeting minutes from the Federal Reserve against upbeat economic reports. They are worried that the weak job market will continue to weigh on consumer spending — which drives the bulk of economic activity. Tech stocks ended the month on a lackluster note with semiconductor stocks among the biggest decliners. The uncertainty surrounding the economic outlook and historically low trading volumes led to increased volatility.

IN FOCUS: Economic reports include an index of nationwide manufacturing activity and a report on private sector job cuts in August.
FEAR METER: The S&P500 implied volatility jumped amid worries about the economic recovery.

The market erased earlier gains as worries about a sputtering economy overshadowed a better-than-expected report on jobless claims. An earlier bounce lost steam as investors turned their focus to the economy, bracing for the latest reading on second-quarter gross domestic product due early Friday. Dell said data-storage company 3PAR has accepted its $1.6 billion takeover bid. But after the market close, rival HP said it has sweetened its bid, topping Dell’s earlier offer. Losers outnumbered winners by nearly two-to-one on both the New York Stock Exchange and the Nasdaq.

FEAR METER: The S&P500 implied volatility inched higher.

A worse-than-expected plunge in existing home sales reignited fears about an economic slowdown. Declines were led by tech, finance and healthcare stocks. Some bargain hunting helped the indexes ease off lows. The market approached short-term oversold levels. Dell is preparing to sweeten its offer for 3PAR. Shares of 3PAR gained 3.6%, while Dell fell 3%. All three indexes closed at their lowest level in seven weeks.

FEAR METER: The S&P500 implied volatility rose to 25.

Disappointing numbers on weekly jobless claims, manufacturing in the Philadelphia region and leading indicators renewed economic jitters. Intel said it will acquire security software maker McAfee for $7.68 billion. Shares of Intel slipped 3.3%. After the close, Dell reported higher earnings and revenue that beat analysts’ forecasts. But shares of Dell fell about 1% in after-hours trading after losing 1.2% during regular hours. Also after the bell, Hewlett-Packard reported quarterly earnings and sales that strongly topped its year-ago results. The stock dipped 0.3% in after-hours trading, after it fell 1.5% during the day. Market breadth was negative.

FEAR METER: The S&P500 implied volatility jumped.

The market was having trouble finding direction as stocks jumped around throughout the day. After falling earlier in the session, shares of Target rose 2.7% in afternoon trading as investors welcomed the company’s outlook for its current quarter. Consumer stocks continue to move higher because of the viewpoint that back to school will be better than people think. Shares of Analog Devices rose 4.4% after the chip manufacturer posted fiscal third-quarter results that beat forecasts. The market has more room to grow in the short-term but trading volumes remain very low.

FEAR METER: The S&P500 implied volatility inched lower on renewed market optimism.

Stocks rallied after the Fed said fears about the central bank’s outlook were “unwarranted” and investors shifted their focus to strong earnings from major retail companies. Analog Devices posted Q3 results that surpassed analyst projections. Its shares rose 1.1%, and more than 2% after hours. We expect more volatility later this week. Trading volumes remain very low.

FEAR METER: The S&P 500 implied volatility dropped on positive news.

Investors remained cautious following four straight losing sessions in the wake of the Fed’s bearish outlook last week. A raft of downbeat economic reports and some tepid earnings results added pressure. Cisco rose 2.6%, and shares of Intel advanced 1.7% after acquisition announcements sparked excitement about other possible takeover deals in the tech sector. Intel is buying Texas Instruments’ cable modem product line. Research In Motion fell on concerns about the launch of its latest smart phone, the BlackBerry Torch, as well as potential problems with the company’s service in India. Market breadth was positive.

FEAR METER: The S&P500 implied volatility index inched lower.

Investors digested disappointing economic reports in the retail and consumer sectors. The Fed said it would start buying government debt in hopes of stimulating lending and in turn economic growth, though investors proved skeptical. Large traders are on vacation and trading volumes remain very low. Dell was accused of refusing to comply with court orders to reveal secret documents. IBM said it will purchase software firm Unica, offering a whopping 120% premium for the marketing analytics company.

FEAR METER: The S&P500 implied volatility little changed.

The market closed modestly lower but recouped earlier losses, as investors digested an unexpected rise in jobless claims and Cisco Systems’ cautious outlook. The market is really oversold and bargain hunters are coming in. Also continuing to drag down the market was the Federal Reserve’s statement from Tuesday. The Fed said the economic recovery is weakening. Oracle sues Google for patent, copyright infringement.

FEAR METER: The S&P500 implied volatility inched higher.