The U.S. markets are not seeing much follow through on Monday's big gain. Investors are sifting through June's retail sales data, the PPI report, lackluster comments from Dell, and a massive earnings report from Goldman Sachs. Meanwhile the U.S. dollar is bouncing and oil is bouncing back toward $60.00 a barrel.
Asian markets were in rally mode as they reacted to the strong gains on Wall Street yesterday. The Japanese NIKKEI finally ended a nine-day losing streak with a 2.3% bounce. The Hong Kong Hang Seng delivered its best one-day gain in weeks with a 3.6% rally. The Chinese Shanghai index rose 2.1% to a new one-year high. European stocks continued to rise as well. Yesterday the European region produced big gains. Today the English FTSE rose 0.8%. The French CAC-40 rallied 0.98% and the German DAX added 1.2%.
There is a tug-of-war going on in shares of Goldman Sachs (GS). The company reported earnings this morning. Wall Street analysts were expecting a profit of $3.49 a share. The company delivered an incredible $4.93 a share or $2.7 billion for the quarter. Trading income was a big contributor with trading gains almost doubling. Goldman's CFO said that the business environment is still challenging. Shares of GS are down less than 50-cents and hovering around resistance at the $150 level. The lack of a rally following this amazing earnings results should be worrisome if you're a bull. The rest of the banking stocks are generally flat with the BKX index down 0.7% and the BIX banking index down 2%.
Another disappointment is DELL. Shares of DELL Inc. are down 7.7% to $12.00 as investors react to management's comments last night. The good news last night is that DELL claims the PC market has hit bottom and that the company's revenues were growing sequentially. The bad news was that DELL believes both the retail consumer and business consumer are deferring purchases and that business conditions will remain tough for months. However, 2010 is shaping up as a good year as more businesses will upgrade their machines when they switch to Microsoft's new Windows 7.
In economic news President Obama finally conceded that unemployment would continue to tick higher for the next several months. Economists have been claiming that unemployment will rise past 10% by early 2010.
Tuesday's economic reports included the retail sales and PPI. The Commerce Department said June retail sales jumped sharply by 0.6%, the best move in the last five months, but unfortunately half that gain was due to a rise in gasoline prices. The Labor Department released the Producer Price Index (PPI) on wholesale prices and the results showed a 1.8% gain, which is about twice as fast as economists were expecting. The sharp rise in wholesale prices can spark fears that inflation is arriving sooner than expected.
Currently the S&P 500 index is up 1.7 points at just under the 903 mark but the intraday sideways consolidation is narrowing, suggesting a break one way or the other soon. The NASDAQ composite is up 2.5 points at 1795 and hovering under round-number resistance at the 1800 level. The Dow Industrials are down less than 4 points at 8328. The Russell 2000 is up just over two points at 495. Basically the market is trading sideways.
Let's take a quick look at charts for the major averages:
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
Scanning the OptionInvestor.com play list for movers today we see that the GDX gold-miner ETF is up 1.7%. ESI is up 1.5% and bouncing back above the $90.00 level. Watch for resistance near $92.00. Mining stock FCX has spiked toward $50.00 and reversed making this look like the failed-rally pattern we've been waiting for to launch new put positions. Defense stock LLL has rallied past resistance at $68.00 and hit our stop loss. Gambling stock WYNN is up 3.99% as the gambling sector bounces higher.