Monday, January 14, 2008

Bump for Stocks Short-Lived ?

Monday's reaction rebound was delivered courtesy of IBM, which announced earnings that beat street estimates prior to the market opening. Stocks bounded clear of the break-even line at the opening bell and remained in positive territory throughout the session.

There is some doubt concerning the strength of today's rally, due to persistently disturbing underlying factors and the absence of volume, which was markedly lower in the wake of Friday's sell-off.

Dow 12,778.15 +171.85; NASDAQ 2,478.30 +38.36; S&P 500 1,416.25 +15.23; NYSE Composite 9,439.31 Up 91.84

While Monday was mirthful, Tuesday promises to be a challenging day, with a series of economic reports - Retail Sales, PPI, NY Empire State Index for January and Business Inventories for November - all to crash the market party by 10:00 am.

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Corporate earnings will also add to the intrigue. Genentech, Inc. (DNA) reports after the bell on Monday, and CitiGroup (C) reports prior to the open and Intel (INTC) takes its turn after the close.

While Genentech has long been the leader of biotech stocks, shares are still down 22% from a year ago. Anticipation for Citigroup is high, as is anxiety. The company is reported to be writing down somewhere in the neighborhood of $12 billion in nasty subprime debt, but the real numbers will offer more clarity to the depth of the crisis - not only for CitiGroup, but for the economy as a whole.

Intel is expected to return 40 cents per share, a 60% improvement over last year's 4th quarter. The chipmaker's stock was up nearly 5% (+1.00, 23.05) after being under severe price pressure last week.

Wednesday through Friday will focus more on earnings as more companies begin to report. Wells Fargo (WFC) and J.P. Morgan (JPM) on Wednesday, Merrill Lynch (MER) and Washington Mutual (WM) on Thursday will hoard attention until General Electric (GE) finishes the week with their quarterly on Friday.

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Advancing issues held a solid advantage over decliners, 4076-1301, but new lows continued to dominate new highs, 407-123.

Commodities continued ascendant. Oil for February delivery was up $1.51 to $94.20 per barrel. Gold reached and exceeded the $900 benchmark, rising $5.70 to $903.40. Silver added 6 cents to $16.43.

NYSE Volume 3,570,775,000
NASDAQ Volume 2,108,366,500

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