EmailWith yesterday's tidy 0.5% gain, the S&P 500 is now up 9.1% in the last month. It may very well go down on this options expiration day based on that fact alone, yet the race is on to assign as much meaning as possible to the three-point drop -- three points(!!!) -- in the S&P futures this morning.
The early reports suggest there are pressing concerns that Greece has yet to announce a successful debt restructuring agreement with private creditors and that there is disappointment that Google (GOOG) and Capital One (COF) missed big with their bottom-line results while General Electric (GE) missed big with its top-line result.
Fortunately, it has been written, Microsoft (MSFT), IBM (IBM), Intel (INTC), Schlumberger (SLB), and American Express (AXP) all beat consensus earnings expectations.
Meanwhile, a preliminary report on manufacturing activity in China in January has been spun as both good and bad -- good because the HSBC flash PMI ticked up to 48.8 from 48.7 in December and bad because January marked the third straight month that this manufacturing reading has been below 50, which is the dividing line between expansion and contraction.
Major Asian markets were up today. Major European bourses are down right now.
The dollar is up right now. The euro is down.
The short message today is that the meaning of the early indication is all in the eye of the beholder.
There is nothing clear cut in today's headlines that resonates as a game-changer on the sentiment front.
In the case of Google, which is indicated to open about 8% lower, it is under attack for missing analysts' lofty earnings estimates by $0.95, never mind the fact that its operating income increased 18% while its revenue jumped 25%.
Microsoft, on the other hand, is being lauded for topping analysts' earnings estimates, never mind the fact that its operating income declined 2% while its revenue increased 5%.
The market sometimes sees what it wants to see, and when it is not sure what it should see, it oftentimes takes the default position of coming down on the opposite side of how the market has been trending.
In that light, the market has been trending higher, so mixed headlines are stirring a wee bit of profit-taking activity this morning.
The Existing Home Sales report for December (Briefing.com consensus 4.55 mln; prior 4.42 mln) could stir things up a bit when it is released at 10:00 a.m. ET. Given the tenor of things this morning, our best guess is that it will be a mixed report.
--Patrick J. O'Hare, Briefing.com
Patrick J. O'Hare is Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial, please email researchsales@briefing.com.
