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Surging yields, solid US data make traders check their guts

Traders on the floor of the New York Stock Exchange.
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Traders on the floor of the New York Stock Exchange.

Taper anxiety is feeding a sell-off that some argue should be embraced. Stocks dropped at the opening bell, with 10-year yields spiking 3 basis points to 2.85 percent after the November ADP Employment report came in stronger than expected, at 215,000 vs. 173,000 consensus.

Stocks, however, are still in an uptrend. Heavens, the anxiety!

The S&P 500 has been on a fairly steady climb for a full year. There have been dips--notably in May/June and October--but they have been shallow. Since then, its been higher highs and higher lows. We are only one percent off the historic highs. With all the hand-wringing, you'd think we were down 20 percent.

Elsewhere

1) Europe rolls over, again. The Nikkei, a day after hitting 6-year highs, drops 2.2 percent...when you can move an index like the Nikkei 2.2 percent overnight on no news (strength in the yen? Really?), it's no wonder a lot of traders complain they don't understand the markets any more.

2) Express lowers guidance. We were all talking Monday about the promotional retail atmosphere around Black Friday. Traffic was up, and mobile sales were strong, but dollar sales were flat to down, and 50 percent off is the new norm.

This morning apparel and accessories retailer Express missed earnings expectations and lowered its full-year earnings outlook amid a highly promotional environment.

"We had been planning for a promotional holiday season, but we now expect the intensity of those promotions to reach heightened levels, and we are updating our full-year guidance accordingly," said CEO Michael Weiss. In addition to cutting its full-year outlook, EXPR also provided fourth quarter earnings estimates below the Street's view. The retailer reported third quarter earnings of 23 cents, two cents below analyst expectations.

This is a double whammy: Sales were below plan over Thanksgiving, and margins are under pressure due to discounting. There will be others who will likely lower Q3 earnings.

3) JC Penney: November gains are less than meets the eye. The retailer reported preliminary November same-store sales of 10.1 percent. The beleaguered company said online sales continued to be strong, tracking "well ahead of last year." CEO Mike Ullman added that he was pleased with Thanksgiving holiday shopping, especially given "continued spending pressures on consumers."

Yes, sales of 10.1 percent were strong, but many had estimates of between 10 to 20 percent. Sterne Agree had the right tone: while double-digit November growth was "a step in the right direction, results are certainly not heroic..." What do they mean? They mean that sales were much more promotional this year, they opened earlier, and they estimate that sales in November of last year dropped 40 percent!

In other words, the bar is pretty low!

4) Car sales on fire: auto retailer AutoNation jumps after announcing November same-store sales popped eight percent, to 24,320 new vehicle units sold. Total sales soared 13 percent with domestic, import, and premium luxury sales all gaining double digits.

By CNBC's Bob Pisani

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

Wall Street