After a week of modest gains with volatile swings in both
directions, Friday closed with stocks mixed, light volume, and
questions over the future profits of two blue-chip heavyweights -
American Express Company
Verizon Communications Inc.
). Over 100 of the S&P 500 companies reported earnings,
including 12 of the Dow 30.
American Express fell 3.1% on weak demand for new loans, while
Verizon fell 1.3% on disappointment over slow growth in the
wireless area. But both exceeded earnings estimates, which
illustrates investors' focus on future expectations.
) beat earnings estimates and rose 2.5%, and
) jumped 5.4% as it too beat estimates. But
) fell 3.5% after an increase in Q3 earnings of 12% and falling
operating margins due to higher costs.
Overhanging the market is the G-20 meeting in South Korea. The
finance ministers and central bankers of key nations are meeting to
reach agreement on "managing exchange rates and cool what has been
called a 'currency war'" (Wall Street Journal).
Treasury prices fell Friday, as investors sold bonds in
preparation of a $109 billion new debt supply this week. The
10-year Treasury note fell 8/32 to push the yield to 2.563%. The
bond market fell on Thursday following a comment by Federal Reserve
Bank of St. Louis President James Bullard who he sees "small
increments" of Treasury-bond purchases when the Fed meets in early
The U.S. dollar rose, which offset some of the losses earlier in
the week. The greenback closed on Friday at $1.3929 versus $1.3925
At Friday's close, the Dow Jones Industrial Average was off 14
points to 11,133, the S&P 500 rose 3 points to 1,183, and the
Nasdaq gained 20 points at 2,479. The NYSE traded only 772 million
shares with advancers ahead of decliners by 1.5-to-1. On the
Nasdaq, advancers were ahead by 1.75-to-1 on volume of 445 million
shares. For the week, the Dow gained 0.6%, the S&P 500 rose
0.6%, and the Nasdaq was up 0.4%.
On Friday, crude oil for December delivery rose $1.13 to $81.69
a barrel, and the
Energy Select Sector SPDR
) gained 39 cents, closing at $59.30. December gold fell 50 cents
to $1,325.10 an ounce with traders "saying that most of the
currency-related jitters surrounding the potential for further U.S.
monetary easing have been priced into the market" (Wall Street
PHLX Gold/Silver Sector Index
) closed at 196.82, up 0.34 points.
What the Markets Are Saying
There is really very little to be said of the market's action
last week other than the fact that the volatility or "sound and
fury" of early in the week was apparently "signifying nothing," to
borrow a line from Shakespeare. But Friday may have provided a clue
as to the future direction of the market with volume at one of the
lowest days of the entire year.
Last week, the Dow added 70 points, the S&P 500 was up 7
points, and the Nasdaq gained 11 points - not a spectacular week
for the bulls, but enough to keep them plodding ahead.
To summarize the last couple of weeks: The S&P 500 spiked
through its 200-day moving average and the double-top at 1,130, and
in a little over a month ran to the major resistance at the bottom
of April's trading diamond at 1,185. It also popped over the
January trading peak at 1,150 and the flash crash rebound at
This is an impressive performance, so what is there not to
Well, first there were very modest stock gains despite 88% of
companies that reported last week topping EPS estimates and 62% had
better-than-expected revenues. And, to put it in the words of
MarketWatch's Michael Ashbaugh, there could be some looming trouble
ahead from a "second 9-to-1 downdraft within the next several
sessions (piling on Tuesday's 9-to-1 sell-off). I would add that
Friday's puny volume numbers and stalling prices in the midst of
some glowing earnings reports makes me more than just a little
uncomfortable. We would not want to see more solid earnings reports
or better economic numbers with accompanying declines in stock
prices - that scenario could turn into a 'good news/bad
market reaction' that often precedes a pullback."
Until the April high is resolved, I'll remain a very cautious
For one of the stocks you should be bullish on, see my
Trade of the Day
Today's Trading Landscape
Earnings to be reported before the opening
Bank of Hawaii, Boardwalk Pipeline, Boyd Gaming, Ceragon,
Changyou.com, DSP Group, Kaiser Aluminum, KVH Industries,
Lorillard, M/I Homes, NuStar Energy, NV Energy, RadioShack, Roper
Industries, Sohu.com and Tuesday Morning.
Earnings to be reported after the close include:
Aaron's, Advent Software, Amgen, Arch Capital, Atheros
Communications, BancorpSouth, Basic Energy Services, BE Aerospace,
Cabot Oil & Gas, Chemed, Covenant Transport, Crane, Developers
Diversified Realty, Digital River, East West Bancorp, Edwards
Lifesciences, Energy XXI, Ferro, Harris, Heartland Financial,
Hexcel, Insituform Technologies, Integrated Device, Kilroy Realty,
Masco, Matrixx Initiatives, MIPS Technologies, Nara Bancorp,
National Instruments, Olin, Owens & Minor, Plum Creek, PLX
Technology, Reinsurance Group of America, Rent-A-Center, SL Green
Realty, Synovus, Texas Instruments, Ultra Clean Holdings, Veeco
Instruments, Vertex Pharmaceuticals, Volterra Semiconductor, W.R.
Berkley, Zix Corp. and Zoran.
Economic report due: existing home sales (the consensus expects
If you have questions or comments for Sam Collins, please
e-mail him at