Friends
Quite a wild day in the market today. After the close yesterday, we got earnings from tech giants IBM and Apple. Though both beat published estimates and had very good revenues, their shares sold off in after-hours trading and continued down this morning. You know the old adage that we talk about all the time – “buy the rumor and sell the news.” Well, these two stocks had been marching straight up for the past few weeks and pretty much anticipated the good news.
Then we got news that China was raising interest rates a quarter of a point, and that helped cause the beleaguered dollar to finally have a move to the upside. You know what happens when the dollar goes up. The risk trade comes off and – everyone say it with me – gold down, oil down and stocks down. Finally, at the end of the day, just when financials were the only things rallying during the session, it is learned that the New York Fed, PIMCO and Blackrock are suing Bank of America over the mortgage mess. Remember, B of A bought and inherited the Countrywide mess.
All of this finally gave the bears something to growl about, and the Dow ended the day down 165 points. After the move up that we have had the past six weeks, there is always a day like this waiting around the corner, and we know that this earnings season was due to cause some volatility. We will look to see if the S&P can hold 1150 on these downturns. As far as earnings are concerned, corporate America is delivering again in terms of real numbers. How the market interprets the numbers is always relative to where stock prices are. After the run up in prices that we have had, a little profit taking is not surprising and may be actually healthy for the market.
Let’s see how the rest of the week unfolds.
