EmailJust when it looked as if the market was showing some resilience, the sellers showed up yesterday afternoon and changed that. Alas, the market's rebound rigor morphed into a case of rigamortis as the bullish bias was left for dead in a late selloff that left the major averages near their lows for the session.
The overall losses were modest in scope, yet stacked together a series of modest losses can produce a big drop. Since last Tuesday's close, the S&P 500 has declined 3.8%. From its peak on September 14, it is down 6.8%.
The early indication this morning is that it will make another rebound attempt.
The S&P futures are trading 0.2% above fair value, bolstered by better-than-expected earnings and guidance from Cisco (CSCO), Abercrombie & Fitch (ANF), and Staples (SPLS), and a batch of economic data that was good enough to confirm that inflation is not an issue and that consumer spending didn't blow away altogether with Superstorm Sandy.
Briefly, the Producer Price Index for October showed a 0.2% decline for finished goods and a 0.2% drop in finished goods, excluding food and energy. The Briefing.com consensus estimates called for 0.1% increases for each of those measures.
A decline in prices for finished energy goods drove the headline number; meanwhile, lower prices for light motor trucks and passenger cars paced the decline in core PPI.
On an unadjusted basis, PPI is up 2.3% yr/yr while core PPI is up 2.1% yr/yr.
The October Retail Sales report has some distortions in it given the effects of Superstorm Sandy, which hit on October 29. The Census Bureau said it is unclear at this time what the net effect was on sales.
What has been reported is that retail sales declined 0.3% in October following an upwardly revised 1.3% increase (from +1.1%) in September. Excluding autos, retail sales were flat following an upwardly revised 1.2% increase (from +1.1%) for September.
According to the Briefing.com consensus estimate, total sales were expected to be down 0.2% while sales, excluding autos, were projected to be up 0.1%. Taking into account the upward revisions, the results were largely in-line with expectations.
Core retail sales, which exclude autos, building materials, and gasoline station sales, fell 0.1%.
Notably, sales at building materials and garden and equipment supplies dealers dropped 1.9% in October. That followed a 2.1% increase in September, yet media reports had created some sense that these stores might have seen a pre-storm preparation boost. That doesn't show in the numbers, but we would expect a sizable rebound to show in the November data.
Market participants will be waiting again to see if the market can fend off selling interest and show some recovery life after violating an important technical support level at the 200-day simple moving average.
The earnings news is good today; the economic data so far has been good enough; but of course the unsettled state of Greece, the eurozone, and the fiscal cliff are enough to keep the good from making a big difference.
