Friends
The market giveth, and the market taketh away. After yesterday’s nice gains for stocks, a couple of earnings reports, namely Goldman Sachs and J&J set the tone for a down day. Goldman, was the main culprit as their dip accounted for a large portion of the drop in the Dow Jones Industrial Average. Actually J&J beat earnings expectations and raised guidance, but that stock had experienced quite a nice advance recently (sell the news). Additionally, another money center bank, Bank of America had a very good earnings report. But Goldman set the tone and was the drag on the market averages.
For the day, the Dow was down 113 points to close at 20,523. The S&P was down 6 point to finish the day at 2,342. Gold was up $1 to trade at $1,292 per ounce, while oil was down $.04 to trade at $52.61 per barrel WTI.
After the market close, IBM will report and we’ll have plenty more over the next few weeks. As we always say, often how a stock has traded into the earnings report will determine the direction after the report, as much as the report itself. In many cases, a stock will rally on a bad report as it had been under heavy selling pressure ahead of the report. And like today with J&J, a stock can sell off on a good report if the shares had been bid up ahead of time. This type of action gives us a good indication as to whether the market is properly priced. Will earnings reports live up to price expectations? Will they disappoint or will they exceed expectations? We’ll let you know how this earnings season plays out.
Have a nice evening everyone.
