Friends
Today’s stock action was a little more dynamic than most of the week. We saw our only triple digit move this week as the Dow fell more than 150 points by late morning trading. The better than expected consumer sentiment number didn’t deter traders from selling stocks early in the day as overnight weakness in Japan and fears that a large hedge fund, that may see some of its employees wearing orange jumpsuits soon, might have to liquidate positions, seemed to trump the positive economic news. But as the day wore on, the bulls began to nibble and market averages reversed direction.
By the close, the Dow Jones Industrial Average was up just 3 points to finish the day at 15,558. The S&P 500 was up 1 point to close at 1691. Gold was up $3 to trade at $1332 per ounce, while oil was down $.80 to trade at $104.70 per barrel WTI. For the week, the bulls could not penetrate 1700 on the S&P, but the bears didn’t get anything done either.
Taking a look at earnings to this point of the earnings season, a familiar theme has surfaced. Yes, once again, companies are meeting or beating bottom line expectations (remember though, these expectations had been lowered recently), but top line revenue numbers continue to be difficult to increase in a meaningful fashion. Companies like Starbucks, Facebook, Schlumberger and Apple have had nice reports, but the likes of Caterpillar and those exposed to China and a strengthening dollar have had a difficult time meeting expectations. The worry is, once again, that we have squeezed as much as possible out of margins in corporate America, and top line revenue growth will be necessary to propel share prices higher.
Next week’s economic calendar includes the Dallas Fed Manufacturing Survey on Monday, the Case-Shiller and Consumer Confidence on Tuesday, ADP private sector employment report on Wednesday, jobless claims and PMI manufacturing on Thursday, and the all-important jobs report on Friday. Of course there is a FOMC meeting that begins on Tuesday also, so next week’s data points should give traders lots to chew on. We’ll be watching.
Have a great weekend everyone.
