The Dow Jones Industrial Average is trading slightly lower this morning, but the market still can't seem to shake the feeling that a bigger drop is in the offing at some point in the future.
Today certainly looks like it could be ignored. S&P 500 futures have declined 0.1%, while Dow Jones Industrial Average futures have dropped 38 points, or 0.2%. Nasdaq Composite futures have dipped 0.1%.
We've remarked before about the market's inability to turn good news into gains, and today's drop comes despite an extension of tariff exemptions on steel and aluminum for the European Union, Canada and Mexico, and continued earnings beats. And there's good reason to wait and see given that Apple (AAPL) reports after the close and the Federal Reserve will release its statement on monetary policy tomorrow.
That hasn't made Wall Street any less optimistic. BofA Merrill Lynch's Sell Side Indicator, a measure that tracks strategist equity allocation targets as a gauge of sentiment, remained at a six-and-a-half-year high in April. It's not yet at a level that suggests it's time to sell, but that day is getting closer, writes Merrill strategist Savita Subramanian. "While we are still a long way off from the current "Sell" threshold, that threshold continues to decline, reflecting the secular downshift in investor appetite for equities in the wake of the Tech "Bubble" collapse and the Financial Crisis," she explains.
One strategist who is most definitely not bullish: Stifel's Barry Bannister. Bannister, remember, predicted the stock market's correction earlier this year, and he doesn't think the S&P 500 has found its floor just yet. In a note released today, he argues that the S&P 500 could fall to 2,520 by the middle of the third quarter, before bouncing 10% back to 2,800. The drop will be precipitated by a general feeling of risk avoidance, as yields fall back to 2.6%, and the dollar rising.
The upshot: This correction might not be over yet.
Earnings & News
Akamai Technologies (AKAM) is up 3.3% to $74 after reporting first-quarter earnings. The cloud services firm earned 79 cents a share on revenue of $669 million. Analysts were expecting earnings of 70 cents a share on $654 million in revenue. For the full year, it raised its guidance, as it now sees earnings per share between $3.15 and $3.15, compared with the $3.01 per-share consensus estimate.
Incyte (INCY) is down 3.3% to $59.93 after reporting first-quarter earnings. The biotech earned a penny a share on revenue of $382.28 million. Analysts were looking for a dime a share in earnings on revenue of $384.03 million.
Noble Energy (NE) is up 2.7% to $34.75 after reporting first-quarter earnings. The energy firm lost 29 cents a share on revenue of $329.59 million. Analysts were looking for a loss of 33 cents a share on revenue of $285.67 million.
Pfizer (PFE) is down 1.5% to $36.05 after reporting first-quarter earnings. The pharma giant earned 77 cents a share on revenue of $12.9 billion. Analysts were looking for earnings of 74 cents on revenue of $13.14 billion. For the full year, Pfizer expects to earn between $2.90 and $3 a share, on revenue of $53.5 billion to $55.5 billion. Analysts are looking for earnings of $2.95 a share on revenue of $54.45 billion.
Tapestry (TPR) is down 10.7% to $48 after reporting third-quarter earnings. The luxury goods maker earned 54 cents a share on revenue of $1.32 billion, while analysts were looking for earnings of 50 cents on revenue of $1.3 billion. For the full yea, it expects to earn between $2.57 and $2.60 a share, on revenue of $5.8 billion to $5.9 billion. Consensus calls for earnings of $2.59 a share on revenue of $5.86 billion.
Transocean (RIG) is down 1.8% to $12.15 after reporting first-quarter earnings. The oilfield services firm lost 48 cents a share on revenue of $664 million; analysts were looking for a 37-cent loss on revenue of $638.4 million.
Under Armour (UAA) is down 5.1% to $16.86 after reporting first-quarter earnings. The athletic apparel company broke even for the quarter, on revenue of $1.19 billion. Analysts were expecting a nickel-per share loss on revenue of $1.12 billion. - Teresa Rivas
Upgrades & Downgrades
Boyd Gaming (BYD) is up 3% to $34.22 after Barclays upgraded it to Overweight.
British American Tobacco (BTI) is down 1.8% to $53.65 after Piper Jaffray downgraded it to Neutral.
Citrix Systems (CTXS) is up 1.2% to $104.13 after Goldman Sachs added it to its Conviction Buy list.
Roku (ROKU) is up 1.4% to $33 after Keybanc Capital Markets initiated coverage with an Overweight rating.
Thor Industries (THO) is up 1.3% to $107.55 after BMO Capital Markets upgraded it to Outperform. - T.R.
Sign up to Review & Preview, a new daily email from Barron's. Every evening we'll review the news that moved markets during the day and look ahead to what it means for your portfolio in the morning.