Intraday Market Update
The equity markets were under pressure this morning on the heels of Alcoa's disappointing Q1 top line revenue results, which kicked off earnings season on a sour note after the bell yesterday. The aluminum producer and Dow member met analyst's bottom line earnings expectations (ex-items) when the company posted its fifth loss in six quarters, but missed its top line revenue target posting a -10% decline from their previous quarter. AA is trading down about -2.50%. On the earnings docket after the bell today are bellwethers Intel and CSX. Many analysts have noted recently that expectations are high for many companies this earnings season, which could pose a downside risk for stocks, possibly creating some "sell the news" reactions and citing that the healthy outlook may already be baked in the market. Goldman Sachs Chief U.S. Economist also made a bearish statement by indicating that the second half of 2010 is posing more threats to the recovery than the first, with the withdrawal of government stimulus and changes in the inventory cycle set to be a drag on the economy.
Today's major economic data was the International Trade report. The report suggested that businesses are more optimistic about domestic demand. The U.S. trade gap widened in February on both oil and non-oil imports. The trade deficit for February expanded to $39.7 billion from a revised $37.0 billion in January. February's gap came in slightly larger than the market forecast for a $39.0 billion shortfall. Exports rebounded 0.2% while imports made a 1.7% comeback. On a year-over-year basis, growth in overall exports of goods and services in February slipped to 14.3% from 15.3% in January. Meanwhile import growth jumped to 23.3% in February from 13.7% the month before. Overall, businesses appear to be in a restocking mode.
The indices are off their lowest levels and are teetering between positive and negative territory. The DJIA is back above the 11,000 while the S&P 500 is trading near the 1,195 level. The NASDAQ is slightly positive. As the markets appear to be continuing their melt-up - closing higher 8 out of the last 9 weeks - traders will be looking for reasons to take profits on their long positions in the coming days/weeks. Trying to squeeze out more gains to the upside is becoming more stressful. Until the next larger directional move becomes clear traders need to be nimble when managing positions.
In equities, Fastenal reported Q1 earnings of $0.38 per share ($0.05 higher than analyst forecasts) with revenues growing +6.4% year-over-year. Shares of FAST were up nearly +6% in early trading but have given back most of the gains and are now higher by about +2.50%. Apparel name Talbots beat top and bottom line expectations and offered very strong guidance for the coming quarter. TLB was up +8% in early trading but has given back most of its gains and is now higher by more than +3%. CF Industries is down more than -4% after warning investors that its revenue would miss estimates this quarter, blaming lower sales volumes in nitrogen and phosphate segments.
Commodities are solidly off there lowest levels of the session. Front month crude oil traded as low as $82.52 but has rebounded and is currently at $83.97 (-0.44%). Crude oil has been under pressure since its 52-week high of $87.10 on April 6. Gold is down to $1,152 per ounce (-0.83%) while silver is down -1.08%, both solidly off of their lows. Natural gas and copper are catching a bid, up +2.50% and +0.85% respectively.
Most international markets closed in the red on Tuesday. Losers in the Asia-Pacific region were led by Japan (-0.81%) and Australia (-0.65%). China was the lone bright spot closing higher by +1.02%.
European markets did not fare well either. All major indices closed lower with the exception of Spain which was flat. The declines were led by France (-0.46%), Germany (-0.32%) and London (-0.28%).
Core Sector List:
Overall reading: 11 sectors declining, 5 sectors advancing
Strongest Sectors: Internet, Home Construction, Retail
Weakest Sectors: Gold Miners, Oil Services, Banks
S&P 500 - Daily and 30-minute Intraday Charts:
Dow Jones - Daily and 30-minute Intraday Charts:
NASDAQ - Daily and 30-minute Intraday Charts:
Russell 2000 - Daily and 30-minute Intraday Charts: