12:50pm (EST)
After a strong open, the bulls once again find themselves giving up ground. Futures were pointing towards a beautiful start to today’s trading but the bulls retreated after testing Monday’s lows which isn’t a good sign.
Let’s start with the boring stuff first. In economic news, Business Inventories for February increased by 0.5% versus expectations for a 0.8% increase. Retail Sales for March increased 0.4%, but fell short of the 0.5% that had been penciled in. However, if we dummy it down further, less autos, retail sales rose 0.8% which was better-than-expected by 0.1%. And finally, MBA purchase applications for the week fell 4.7%.
The Financial stocks have shown no leadership despite JPMorgan (JPM, $46.27, down $0.37) reporting solid 1Q earnings as Wall Street found something wrong with it. The company netted profits of $5.6 billion, or $1.28 a share, versus $3.3 billion, or $0.74 a share, in the year ago period. Revenue came in at $25.8 billion.
The suit-and-ties were looking for earnings of $1.16 a share on revenue of $25.5 billion. Although JP’s profits surged 67%, shares are trading lower after a run up to $47.37.
We were hoping for a bigger pop in the stock at the open because the company is still one of the top ten banks in the world and their numbers were good on the surface. The bulls were hoping the company’s recent announcement of a dividend boost to 25 cents from 5 cents and the fact that they authorized a $15 billion share buyback would be enough for shares to make a run at its 52-week high of $48.36.
The one concern analysts’ shared was that the bank’s retail services business which took a $1 billion hit after its mortgage unit reported negative revenue and wrote-off what it could.
We have talked until we are blue in the face that the Financial stocks would need to participate in the market’s next leg up but there is no confidence in this sector right now. In time, there will be, but we have said that the bulls would need their help and when you can’t count on JP for backup, who else is there?
Next up will be Bank of America (BAC, $13.34, down $0.13) which reports earnings before the bell on Friday.
The market was up as we started our afternoon update but is mixed as we go to press as the bears are once again in control.
The Dow is down 33 points to 12,230 while the S&P is lower by 5 points to 1,309. The Nasdaq, however, is up 2 points to 2,747.
We have a ton to talk about and some interesting plays on our Watch List. As the market continues to gyrate, one this is for certain. This is truly becoming a “stock picker’s” market. Subscribers, check the Members Area for the important updates.
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