The market is lower in early trading, which shouldn't be much of a surprise given the outsized rally we have seen since the early October lows. There are reports coming out now that leaders in Europe are having some difficulty agreeing on some components of the proposed plan, and we are supposed to hear tomorrow what they have come up with.
Earnings reports continue to roll in, and the reactions in stocks have been a mixed bag this morning.
On the positive side, stocks that are seeing a bounce include: NUS, NOV, COH, BP, UA, COLM, and ILMN.
On the negative side, stocks dropping on earnings reports include: ITW, X, UPS, DB, TROW, CMI, X, and the poster child NFLX. But the most talked about downside guidance is coming from MMM which expects slower growth in 2012 and talked about specific weakness in Europe.
In economic news, the Consumer Confidence number for October dropped more than expected (no surprise) to 39.8 from 45.4 in the prior month. Also, the Case-Shiller Housing Price Index fell -3.8% in August.
Commodities continue to rally, with oil prices now all the way back to $94, and gold inching higher to $1685.
The 10-year yield has eased back to 2.16%; and the VIX has bounced 5% back above the 30 level to 30.75 currently. This is still an elevated level, and really needs to get back down into the 20s before we can expect a noticeable drop in the big market swings of late.
Trading comment: Investors are certainly feeling better after the last week of up days in the market. I sense that a lot of portfolio managers remain underinvested, and will be looking to add to stocks on a pullback. The wildcard of course is that we are still being held hostage to political decisions coming out of Europe about how they are dealing with this debt crisis. But unless there is another big shoe to drop in Europe, I think the market has pretty much priced in a lot of the issues for the near-term, and a continued unwind of investor pessimism should provide some support to the market.
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