In Other Matters For better or worse, the third quarter earnings reporting period is going to round into form as a market mover. It may just take a little longer, though, as other factors look to be dictating things at the moment. The other items include a budding sense that the stock market is oversold on a short-term basis and due for a rebound of some kind (the earnings guidance will help determine if its a sustainable rebound) and a material drop in long-term interest rates. The drop in rates has stemmed from growth concerns and a safety trade amid the fallout in global stock markets. The yield on the 10-yr note hit 2.20% this morning while the yield on the German bund dropped to 0.80%. Fittingly, the latter moves were fueled by some upset in foreign stock markets that followed Wall Streets ugly day on Monday and a batch of disappointing economic news out of the Europe that featured a 1.8% decline in industrial production in August, some weaker than expected CPI data for the U.K., France, and Italy, a decline in Germanys economic sentiment index, and Germany itself lowering its 2014 GDP outlook to 1.2% from 1.8%. Japans Nikkei dropped 2.4% on Tuesday and Germanys DAX Index is unchanged after being down as much as 1.3% earlier. The turn in the DAX Index coincided with a turn in the S&P futures market that began around 6:00 a.m. ET. At the moment, the S&P futures are up 12 points and are trading 0.5% above fair value. The earnings reports from JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) werent the catalyst for the turn as they were released after 6:00 a.m. ET. Furthermore, they were mixed relative to expectations. JPMorgan came up shy of estimates, Wells Fargo was in-line, and Citigroup was slightly ahead. Johnson & Johnson (JNJ) posted better than expected results and is indicated about 1.0% higher in pre-market trading. That is helping a bit, yet its not enough to account for the 13-point gain in the futures market. No, that gain is rooted more in the belief than anything else that buyers will step up today after the S&P 500 closed below its 200-day moving average for the first time since November 2012. It is a hopeful mentality, but it could also end up being quite damaging from a sentiment standpoint if it doesnt come to fruition. A big jump at the open will be nice to see for market bulls, yet the issue of whether it can be sustained is the real matter at hand. Source: Briefing
Posted on: Tue, 14 Oct 2014 13:05:21 +0000
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