The market ended mixed on Monday as the Nasdaq closed in positive territory while the Dow and S&P 500 finished in the red but off their lows of the session. Financial stocks were weak, led by Goldman Sachs (GS, $161.05, down $5.62) after it was named in a possible insider-trading investigation. We touched on this subject yesterday and it’s too early to tell if this is another Wall Street witch hunt or something more serious. There is chatter the probe could have a major impact on the financial industry, more so than we have seen in the past.
Bank of America (BAC, $11.30, down $0.36), fell 3% and is near its 52-week low of $11.03. We said a month ago shares of BAC could fall to $10 and possibly $8 if support at $13 was broken.
As a result, the Dow opened lower and things worsened as the index fell nearly 150 points to a low of 11,054 before rebounding sharply to finish at 11,178, down 25 points, or 0.2%. The 11,000 level held as support once again while 11,200 remains overhead resistance.
The S&P 500 fell 2 points, or 0.2%, to close at 1,197 after trading to a low of 1,184. We mentioned the strong support at 1,170-1,175 but the bulls need a close above 1,200 to kick-start the index.
The Nasdaq traded on both sides of the ledger but showed strength as it managed a 17 point gain, or 0.6%, to settle at 2,532. We are looking for a run back to the 2,600 level with support coming in at 2,500 and then 2,450.
Hewlett-Packard (HPQ, $43.25, up $0.76) came in with better-than-expected earnings after the bell. The company reported a profit of $2.54 billion, or $1.10 a share, compared with $2.4 billion, or $0.99 a share, in the year ago period. Revenue checked in at $33.3 billion, up from $30.8 billion.
Excluding items, HP earned $1.33 a share which was higher than Wall Street’s forecast of $1.27 a share on revenue of $32.8 billion.
Going forward, they told analysts to expect profits of $1.28-$1.30 a share, excluding charges, on revenue of $32.8 billion to $33 billion. The suit-and-ties had penciled in earnings of $1.22 a share on revenue of $32.7 billion.
The beat and raise by HP was nice to see but futures are pointing towards a nasty open after news of an exchange of fire between North and South Korea. North Korea fired dozens of artillery rounds at South Korean which said it fired back.
The geopolitical events have us looking at a triple-digit loss to start as Dow futures are lower by 103 points to 11,062. The S&P 500 futures are lower by 14 points to 1,185 while the Nasdaq 100 futures are down 20 to 2,134.
The bulls will be trying to hold support today so let’s see how this plays out. Subscribers, check the Members Area for the updates.