Tuesday, November 19, 2013
Stocks briefly touched milestone levels on Monday, but couldn't
hold onto the gains. Pre-market sentiment is indicating a
modestly lower open for the indexes, though strong results from
) will likely give that index some lift. While overall momentum
in the market still remains to the upside, it is reasonable to
expect near-term tentativeness given the absence of any major
catalysts in the coming days.
There is little doubt that the major stock market indexes will
reach the milestone levels in the next few days, but their
ability to build on those level will be a function of
developments on the Fed front. Even the OECD cited uncertainty
about Fed policy as one of the risk factors to the global
economic outlook as it lowered its global GDP growth projection.
The U.S. economy has been doing much better relative to other
developed economies, but the Fed's inability to wean the markets
off of artificial liquidity injections is only delaying the day
of reckoning for the global economy.
The U.S. economy will for the most part do just fine in a post-QE
world, though some rate sensitive sectors will likely feel new
pressures. But the end of QE will most certainly be immensely
destabilizing for the emerging economies given its impact on
capital flows into those markets. With a number of key emerging
market economies like India, Brazil, Turkey and others already
undergoing growth deceleration, the prospect of less or no QE on
the horizon is materially unhelpful, to say the least.
In corporate news, Home Depot's blowout numbers today reconfirm
that the big-box retailer continues to be a big beneficiary of
the home improvement cycle.
) came out with better than expected results for the October
quarter, but the company warned about its margin outlook in the
current period given the highly promotional environment this
) missed expectations and guided lower.
Director of Research
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