Traders are still buying the dip with the fiscal yearend for many funds quickly approaching on October 30th. There was some follow through this morning from Wednesday's sharp, afternoon sell-off but the markets are bouncing off their lows of the day. The major U.S. averages are back in positive territory thanks to another round of positive earnings announcements. Economic data was mixed as investors sifted through the leading economic indicators and weekly jobless numbers. Meanwhile a bounce in the U.S. dollar weighed on commodities.
Most of the foreign markets gapped open lower in reaction to Wednesday's afternoon sell-off in the U.S. The Asian markets all closed lower. The Chinese government said GDP growth rose from 7.9% to 8.9% in the third quarter. This was inline with forecasts but what concerned many traders were comments from the National Bureau of Statistics, who said China will be watching inflation pressures closely and would be ready to adjust their monetary policy. The Chinese Shanghai index lost 0.6%. The Hong Kong Hang Seng fell 0.48%. The Japanese NIKKEI dropped 0.6%.
Stocks were weaker in Europe. A worse than expected earnings report from telecom equipment maker Ericsson weighed on sentiment. In England investors were frustrated with stalling retail sales for the second month in a row. Energy stocks were one of the biggest drags on the market thanks to some profit taking in crude oil prices. The English FTSE lost 0.96%. The German DAX gave up 1.2%. The French CAC-40 fell 1.3%.
It was another busy day for earnings reports. Investors were disappointed with last night's announcements from biotech firm Amgen (AMGN) and Internet auctioneer Ebay (EBAY). Fortunately the tone this morning was much more positive with better than expected results from 3M (MMM), AT&T (T), McDonald's (MCD), Travelers (TRV), Phillip Morries Intl. (PM), Xerox (XRX) and Dow Chemical (DOW). MMM, PM and TRV all raised their earnings guidance for the fourth quarter.
Economic data was somewhat mixed. The Conference Board's leading economic indicators rose 1% in September following a 0.4% rise in August. September's reading was better than expected and the last six months has seen the strongest growth in the LEI's since 1983. The LEI is supposed to forecast economic growth for the next three to six months. Meanwhile the Labor Department said weekly initial jobless claims rose from 520,000 a week ago to 531,000.
Elsewhere an early morning rally in the dollar has petered out. The oversold bounce this morning sent gold and crude oil lower but the trend has reversed with the dollar sinking back into negative territory and gold and oil crawling back to minor gains on the session.
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:
Chart of the U.S. dollar ETF (UUP):
The market is recovering from their morning lows and we're seeing a similar bounce from the lows on our OptionInvestor.com play list.