Friends
Stocks suffered an ugly reversal today as market participants are concerned about interest rates, earnings peaking and an economy that might have seen its best days for a while. First, we finally broke the 3% barrier on the 10 year Treasury note this morning. That on its own didn’t seem to bother traders, but when Caterpillar mentioned in its conference call that the great first quarter that they had might be the best of the year. In other words, the worry is that the tax bill aided earnings that we are seeing this quarter might be the peak for this cycle. We have a long way to go to determine if that is true or not, but that was the narrative on this day.
As mentioned, after a nice opening stocks rolled over and tumbled midday. The aforementioned Caterpillar opened up very nicely only to fall more than 10% from its peak. As for the market averages, by the close the Dow Jones Industrial Average was down 424 points to finish the day at 24,024. The S&P 500 was down 35 points to close at 2,634. Gold was up $10 to trade at $1,333 per ounce, while oil was down $.90 to trade at $67.74 per barrel WTI.
Indeed, earnings are good, as expected, but the reactions to these good earnings have not been good. The pattern is one that exposes a market that has a negative bias. At the moment it doesn’t look like good earnings are enough to excite the bulls. Let’s see if that changes over the next week or two. If not, the bears might have something to build on. We’ll keep an eye on it all for you.
Have a nice evening everyone.
