Monday, April 11, 2011

No Euphoria Over Budget Deal, Earnings

One might have expected some kind of reaction from the stock market after Friday night's final hour deal to keep the government running, or even from advance interest in the deluge of upcoming corporate earnings reports, but, despite an early session push higher, stocks drifted lower and lower throughout the session.

The Dow jumped out of the gate to an early high, up 62 points, but gave all expect one paltry point back as the day progressed.

While the theory may be that the government was supposed to remain open and in business, so no, the stock market would not react, the reality is that since the major indices bumped headlong into resistance on Wednesday, there's been nothing but retreat and even a robust earnings season (which is unlikely) may not be able to shake the markets from their sideways-down direction.

On the day, the Dow Jones Industrials, the smallest index by numbers (30 stocks), though the largest by measure, was the only one to post a gain in any of the past three sessions, and even that was somewhat of an aberration caused by heavy buying of Alcoa at the close.

As it was, Alcoa (AA), the world's largest aluminum manufacturer, and traditionally the first company in the Dow to report, was off 15 cents at the close (17.77) and was trading marginally higher (+0.06) in after-hours trading. The company reported earnings of 28 cents per share, a penny above estimates, but revenue short of expectations by almost two per cent.

Dow 12,381.11, +1.06 (0.01%)
NASDAQ 2,771.51, -8.91 (0.32%)
S&P 500 1,324.46, -3.71 (0.28%)
NYSE Composite 8,445.77, -38.17 (0.45%)

Even though stocks finished with small movement, declining issues danced all over advancers, 4471-2165, a ratio of more than 2:1. New highs on the NASDAQ totaled a mere 59, with 32hitting new lows. On the NYSE, new highs led the way, 108-16, over new lows. Volume, on the first day of the week, was encouraging, as it was not horrible, though still just barely with a pulse.

NASDAQ Volume 2,039,947,625
NYSE Volume 3,841,427,750

Thanks to some large positions being taken off, notably by Goldman Sachs, the oil rally came to an abrupt halt on Monday. WTI crude futures fell $2.85, to $109.92 and were down even more after the NYMEX close. Gold dropped $6.00, to $1,468.10, while silver managed to remain flat, at $40.61.

With the budget deal due to be singed and passed sometime this week, investors will be focusing squarely on quarterly reports over the next few weeks, and prospects are said to be good, with the vast majority of companies meeting or beating Wall Street expectations.

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