Stocks around the world continue to sink. The S&P 500's intraday bounce on Friday has failed and stocks are hitting new relative lows with the index headed for the 1,100 level. The same factors that pushed stocks lower yesterday remain in force. Obama's new proposed regulations for the banking industry, fears that China could be ready to raise interest rates in an attempt to slow down their economy, and general profit taking as investors sell any earnings news without regard to whether the results are good or bad. The dollar's weakness is not lending any strength to commodities. Crude oil is down over $1.00 and trading under $75 a barrel. Gold futures are down over $12 and trading near $1,091 an ounce.
Asian and European markets were down across the board. The Japanese NIKKEI hit a three-week low with a sharp 2.5% sell-off on Friday. The Chinese Shanghai index plunged -3% intraday but pared its losses to just -0.96%. The Hong Kong Hang Seng fell -2.9% intraday but closed with a -0.65% loss. Volume was very strong in Hong Kong and the intraday bounce might suggest stocks are oversold and due for a rebound.
European markets produced their worst weekly decline in nearly three months. Banks were hit hard on Friday as Britain, France, and Germany all voiced support for Obama's new rules on banks. The retail outlook in England is sinking with the Office for National Statistics reporting retail sales came in worse than expected. The English FTSE lost 0.6%. The German DAX fell 0.9%. The French CAC-40 gave up 1.0%.
The U.S. markets are suffering their worst two-day decline in over six months. Positive earnings news has not been enough to lift stocks. Instead investors are using the earnings announcement as catalyst to sell and lock in gains. Some of the big companies reporting in the last 24 hours were American Express (AXP), General Electric (GE), and Google (GOOG). AXP delivered a profit of 59 cents a share, which was two cents better than Wall Street's estimates. Revenues fell 0.3% but came in at $6.49 billion for the quarter, which also beat analysts' estimates of $6.14 billion. Loan losses came in at $748 million, which was down 47% from a year ago.
GE announce a profit of 28 cents per share, which also beat analysts' estimates by two cents. Revenues dropped just over 10% to $41.4 billion but beat Q4 revenue estimates of $40.02 billion. GE's management said they saw some "encouraging signs" late in the year and the stock is actually up 1.3% on the session but off its best levels of the day. GOOG reported earnings last night of $6.79 per share beating analysts' estimates of $6.50 a share. GOOG's revenues came in at $4.95 billion, up 17.3% and above the $4.92 billion estimate. That wasn't good enough for investors and the stock plunged toward $550 in after hours last night. GOOG gapped open lower at $564 this morning and is trading down 3.9% near $560 a share.
On the economic front the state-specific unemployment numbers were released. In November 36 states saw unemployment decline. That trend was reversed in December where 43 states all reported a rise in unemployment. Michigan maintains the worst unemployment level at 14.6%. Four regions saw new record highs with South Carolina at 12.6%, Delaware at 9%, North Carolina at 11.2% and the District of Columbia 12.1%.
Currently the S&P 500 index has broken technical support at its 50-dma. The NASDAQ is also trading under its 50-dma with a 1.75% decline. The Dow Industrials broke their 50-dma yesterday and the index looks headed for the 10,000 level. The small cap Russell 2000 index is off 0.9% and making at run at its 50-dma. The SOX semiconductor index, which has been trading sideways all week, finally broke down and fell through its 50-dma. The Transportation index is off 1.5% and now under its 50-dma. I think you get the picture.
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 I see that shares of AAPL have collapsed toward the $200 level and hit our stop loss. JOYG has hit our new trigger to buy calls at $50.50. TTC has broken key support and hit our stop loss. GMCR hit our trigger to buy puts and our stop in the same day! MTD looks like it could hit our trigger to buy puts at $99.40 soon.