Daily Wrap
DJIA +84.79 (+0.63%) to 13,596.02; S&P 500 +8.31 (+0.56%) to 1,480.94; NASDAQ +18.46 (+0.59%) to 3,136.00
Today started with a gap higher and then continued leaving a chart which moved from the lower left to upper right. The market really started its move after we got a much better than expected Weekly jobless claims number which came in at 335K vs the expected 369K. The markets did make their high just after 2pm and moved lower into the close and after the close but not destructively so. The news causing the decline may have been from Dallas Fed hawk Fisher reminding the QE will not be forever and stating he would not have voted for the last round or Treasury and MBS purchases. I would expect more Fed officials will come to see Fisher’s thinking as time continues but the Fed has also been pretty transparent about expected easing into the future.
In the news today we saw more financial firms report earnings. Citigroup (C) closed nearly 3% lower after missing earnings estimates. I saw an interesting note which was something I was watching which was and I apologize I forget who made the comment that C had released past loan loss reserves to help boost their bottom line. My concern has been that there seemed to be a trend of companies beating EPS and missing revenues. My fear was that companies were using accounting “techniques” in order to meet or beat EPS when their wasn’t actually an increase in demand. This note about C might very well be an example of that. One company doesn’t make a trend but again is something I will continue to watch, namely the EPS vs revenue reports.
Bank of America (BAC) close 4.75% lower, also on earnings. BAC technically beat estimates but they were greatly lowered estimates and they also noted that Q4 was weighed down by $2.7B in settlements with Fannie Mae. Not all the reporting financials missed and Blackrock (BLK) beat both EPS and revenues and was rewarded with a move today up over 4%.
We had a merger today. K-Swiss (KSWS) agreed to be purchased by E.Land World for $170M or $4.75 per share cash.
Boeing (BA) received additional bad news today as Air India and EU regulators joined in on banning 787 flights until there is an acceptable resolution regarding the plane’s battery security. The difference between news and trading is that on that news, BA closed up over 1.4% after bouncing off the 200 day SMA. News definitely matters, when it is not already baked into the stock and I think this is a case where the pile on was expected.
Since the beginning of the year there have a been a great deal of analyst upgrades and downgrades and this is a reminder that you can review the list I compile each day as well as an archive of past days in the Upgrades/Downgrades section.
As always you can visit the Event’s Calendar for the release of economic data, scheduled meetings and other news that could move the market.
According to Briefing.com, the following noteworthy companies are scheduled to report earnings before tomorrow’s open: FHN, GE, JCI, MMR, MS, PH, COL, SLB, STT, STI, WBS
Today was a strong rally on better than expected weekly jobless claims. Interesting that a late day sell off actually caused us to lose our intraday break out levels. My ideal situation has been for a better pullback before a more constructive rally and maybe today was a fake-out to the upside to then give me what I want. We will have to watch to see but there also still seems to be a great list of trade ideas out there and I post mine on StockTwits (WSConsensus).
