David Moenning Daily State of the Markets: 1/18
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Trifecta of Trouble (Times Two)
Stocks fell victim to a �Trifecta of Trouble� yesterday as all of a sudden, all the news seems to be negative. The combination of a spike in oil prices, weakness overseas, and disappointing earnings from the banks definitely put a damper on the mood during Tuesday�s session, which saw the indices decline across the board.
The bears didn�t exactly have a field day, but they did have plenty of ammunition to fend off the bulls� efforts on the day. The trouble started overseas in Nigeria and Japan, but then picked up steam here in the U.S. after the close, as investors were treated to a tech wreck times three in after hours trading.
The issues of oil and trouble in Japan were in place before the market opened on Tuesday, which set up a down opening. However, from there it was disappointment over bank earnings and worry over tech earnings that kept the bulls on their heels. Results from Wells Fargo, Fifth Third Bancorp, and US Bancorp were all uninspiring, and then about mid-day, the rumors began to flow about the triumvirate of IBM, Intel, and Yahoo.
Stocks benefited from a couple of buy programs late in the afternoon, but finished the session solidly in the red. But then after the close, traders got another Trifecta of Trouble as earnings reports from IBM, Intel, and Yahoo were all disappointing. In short, the news is setting the stage for a very tough day today in tech.
IBM actually beat the street�s earnings estimates by a large margin, but numbers fell short on the revenue side. Intel had a Trifecta of its own by missing on earnings by $0.03, missing on revenues, and then guiding lower. And Yahoo, which was expected to be a bright spot, also missed by a penny and provided lackluster guidance. Needless to say, these stocks are being punished for their sins. This morning, Intel is trading lower by -$2.72 or -10.66%, while Yahoo is off -$4.77, which represents a decline of -11.9%.
Turning to this morning�s economic news, the CPI report was a pleasant surprise. The headline CPI number actually fell by -0.1%, which was below analysts expectations for an increase of +0.2%. However everyone knows that the Fed is focused on the Core Rate, so it is encouraging that the CPI ex. food and energy was quite tame at +0.2%. And on a year-over-year basis, the Core Rate shows a gain of just 2.2%, which, given the increases in energy and other commodities, is rather remarkable.
However, while the news on inflation is good, it isn�t exactly a new story as the trend lately has been toward inflation remaining under control. And as such, traders aren�t taking the report to heart. On the other hand, bond traders are in buy mode after the report and have pushed the yield on the 10-year all the way down to 4.31%. The move has pushed the 10-yr once again below the yield on the 2-year, which is sure to attract some attention.
While bonds are up on the CPI news, the stock futures are a different story. With more trouble in Japan (the Nikkei fell another -2.9%), oil again on the rise (crude futures are up another $0.53 to $66.84), and tech shares tumbling, the futures are mired in red ink before the bell (Dow -76, S&P -9.50, and NASDAQ -33).
So with a rough open on tap, it will be interesting to see if the bull try and mount a charge at some point today, or simply stand aside.
Stocks "In Play" This Morning:
INTC � Reported $0.40 vs. $0.43, $10.2B in revenue vs. $10.56B, lost market share and lowered guidance. Downgraded at Piper, UBS, Citigroup, JMP, and Lehman
C � Reports indicate the company will launch its own trading platform
IBM � Reported $2.11 vs. $1.94 but revenues of $24.4B vs. $25.2
YHOO - $0.16 vs. $0.17
HPQ � Mentioned positively at Goldman
JPM � Reported $0.73 vs. $0.72
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: INTC, IBM
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
Stocks fell victim to a �Trifecta of Trouble� yesterday as all of a sudden, all the news seems to be negative. The combination of a spike in oil prices, weakness overseas, and disappointing earnings from the banks definitely put a damper on the mood during Tuesday�s session, which saw the indices decline across the board.
The bears didn�t exactly have a field day, but they did have plenty of ammunition to fend off the bulls� efforts on the day. The trouble started overseas in Nigeria and Japan, but then picked up steam here in the U.S. after the close, as investors were treated to a tech wreck times three in after hours trading.
The issues of oil and trouble in Japan were in place before the market opened on Tuesday, which set up a down opening. However, from there it was disappointment over bank earnings and worry over tech earnings that kept the bulls on their heels. Results from Wells Fargo, Fifth Third Bancorp, and US Bancorp were all uninspiring, and then about mid-day, the rumors began to flow about the triumvirate of IBM, Intel, and Yahoo.
Stocks benefited from a couple of buy programs late in the afternoon, but finished the session solidly in the red. But then after the close, traders got another Trifecta of Trouble as earnings reports from IBM, Intel, and Yahoo were all disappointing. In short, the news is setting the stage for a very tough day today in tech.
IBM actually beat the street�s earnings estimates by a large margin, but numbers fell short on the revenue side. Intel had a Trifecta of its own by missing on earnings by $0.03, missing on revenues, and then guiding lower. And Yahoo, which was expected to be a bright spot, also missed by a penny and provided lackluster guidance. Needless to say, these stocks are being punished for their sins. This morning, Intel is trading lower by -$2.72 or -10.66%, while Yahoo is off -$4.77, which represents a decline of -11.9%.
Turning to this morning�s economic news, the CPI report was a pleasant surprise. The headline CPI number actually fell by -0.1%, which was below analysts expectations for an increase of +0.2%. However everyone knows that the Fed is focused on the Core Rate, so it is encouraging that the CPI ex. food and energy was quite tame at +0.2%. And on a year-over-year basis, the Core Rate shows a gain of just 2.2%, which, given the increases in energy and other commodities, is rather remarkable.
However, while the news on inflation is good, it isn�t exactly a new story as the trend lately has been toward inflation remaining under control. And as such, traders aren�t taking the report to heart. On the other hand, bond traders are in buy mode after the report and have pushed the yield on the 10-year all the way down to 4.31%. The move has pushed the 10-yr once again below the yield on the 2-year, which is sure to attract some attention.
While bonds are up on the CPI news, the stock futures are a different story. With more trouble in Japan (the Nikkei fell another -2.9%), oil again on the rise (crude futures are up another $0.53 to $66.84), and tech shares tumbling, the futures are mired in red ink before the bell (Dow -76, S&P -9.50, and NASDAQ -33).
So with a rough open on tap, it will be interesting to see if the bull try and mount a charge at some point today, or simply stand aside.
Stocks "In Play" This Morning:
INTC � Reported $0.40 vs. $0.43, $10.2B in revenue vs. $10.56B, lost market share and lowered guidance. Downgraded at Piper, UBS, Citigroup, JMP, and Lehman
C � Reports indicate the company will launch its own trading platform
IBM � Reported $2.11 vs. $1.94 but revenues of $24.4B vs. $25.2
YHOO - $0.16 vs. $0.17
HPQ � Mentioned positively at Goldman
JPM � Reported $0.73 vs. $0.72
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: INTC, IBM
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
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