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U.S. financial markets continue to trade sideways heading into the last hour of trading this Thursday. Despite news of a suicide-car bombing that may have taken the lives of four U.S. marines, the feeling is that most of the heavy lifting is done for the Coalition forces. Strangely enough Wall Street appears to be shifting its focus from Iraq to earnings. That could be bad news for investors. The earnings picture is pretty bleak right now.

Many of the country's biggest retailers shared their same-store sales numbers today. For weeks now we've heard talk about how the weather and the war had consumers spending less and it appears to be coming to pass. The biggest retailer in the world, Wal-Mart (WMT) had been expected to turn in a same-store sales increase of 1.5 percent. WMT turned in 0.7 percent. The second biggest retailer, Sears (S) produced a 2.3 percent decline in same-store sales. Meanwhile, Kohl's (KSS) offered a gain of 0.4 percent but analysts had been expecting a gain of 1.3 percent. Showing further weakness were J.C.Penney (JCP) who said monthly sales dropped 5.5 percent and Federated Department Stores (FD), who operates chain stores like Bloomingdales and Macy's turned a 6.5 percent drop. Wall Street will get the official Retail Sales numbers tomorrow and today's results are not positive for the group.

The volatility indices VIX and the VXN continue to slide slowly lower as the general market indices remain trapped in this range. What could be a catalyst, one way or the other, are tomorrow's big events. Wall Street will be waiting for the PPI report as well as the Michigan Sentiment numbers. Probably even more telling will be General Electrics earnings report due out tomorrow. How much guidance the world's biggest company can offer investors may well determine market sentiment heading into the weekend.

Currently, the Dow Jones Industrial Average is +10 at 8208, the Nasdaq composite is up 7.7 points to 1364 and the S&P 500 is positive by 4 points to 870. Across both exchanges advancing issues are barely out pacing decliners and up volume is currently beating down volume 1.12 billion to 992 million shares.

- OI Staff

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