Things went about as expected yesterday. The US equity market pulled back on some profit taking and Alabama crushed Notre Dame in the BCS Championship game.
There doesn't appear to be any rush today either to pick up the pieces. The S&P futures are trading 0.3% below fair value, leaving the cash market on course for a slightly lower open.
This is not surprising. Following a 4.6% gain in just four sessions, it stands to reason that the market would see a period of consolidation.
Whether the market can regain its bullish stride in short order will likely be determined by the fourth quarter earnings reports. Alcoa (AA) kicks things off tonight after the close before the real rush of earnings starts next week.
Earnings-related headlines this morning are somewhat mixed.
Monsanto (MON) reported earnings for its fiscal first quarter ending in November that topped the Capital IQ consensus estimate by $0.26. Interestingly, though, the company didn't bump up its FY13 EPS guidance by a like amount, as it moved its expected range from $4.18-4.32 to $4.30-4.40.
Cypress Semiconductor (CY) issued a warning for the fourth quarter that was tied to weaker-than-expected demand. Gamestop (GME) said it expects fourth quarter earnings at the low end of its guidance range due to a decline in store traffic. Yum Brands (YUM), meanwhile, reaffirmed its FY12 EPS guidance of approximately $3.24 (Capital IQ consensus is $3.27), but lowered its same-store sales guidance for its China division from -4% to -6%.
These announcements have not had any direct effect on the broader market, although they are probably indirectly serving as reasons for buyers to keep to the sidelines for the time being.
Elsewhere, it was reported that the unemployment rate in the eurozone hit a record-high 11.8%. That was expected, so European markets took the news in stride. Most are actually posting modest gains at this juncture.
One headline that is garnering a lot of attention today is the report that AIG (AIG) is considering suing the government for the onerous terms it imposed when it bailed out the company during the financial crisis.
That headline is loaded with editorializing potential, but we'll bite our tongue in much the same way Notre Dame fans are this morning.