EmailIt has been quite a roller-coaster ride this week and we're not talking the roller coaster in kiddie land. There have been some big swings, the latest of which was yesterday's 1.4% decline in the S&P 500 that eliminated Tuesday's 1.4% gain. That leaves Monday's 2.3% decline as the performance swing factor at this point.
The market, however, is expected to cut into this week's losses when trading begins. The cut won't be deep though as the S&P futures are just 0.2% above fair value.
A rebound in European markets, facilitated by talk of a potential ECB rate cut, has lent a measure of support. In turn, the reflex trade also appears to be in play. That is, see stocks go down big one day and buy the dip the next.
We're not sure, though, if there is going to be a big buy-the-dip rally today like we saw on Tuesday.
The pummeling that commodities have taken of late, and particularly base metals -- the building blocks for industrial growth -- has raised a number of flags as it pertains to the growth outlook. Also, burgeoning concerns about the goings-on in China and renewed concerns about the state of the eurozone are acting as headwinds.
First quarter earnings continue to come in better than expected for the most part. Nothing unusual there as companies hurdle over analysts' reduced earning estimates. Still, revenue growth that is weak, if not negative, provides a sense that demand wasn't all that strong.
For example, PepsiCo (PEP) beat the Capital IQ consensus estimate by seven cents on a mere 1.2% jump in revenue. Sherwin-Williams (SHW) beat by a penny with revenues up just 1.4%. Union Pacific (UNP) for its part saw revenues increase 3.5% on a 2% decline in volume.
For the full rundown of earnings reports since yesterday's close, be sure to visit Briefing.com's Earnings Calendar page.
Separately, the initial claims report for the week ending April 13, which is also the week the BLS conducts its household survey, showed a slight jump in claims to 352,000 (Briefing.com consensus 355,000) from 348,000.
After the volatility associated with seasonal adjustment problems around the Easter holiday, initial claims seem to be settling down again at better levels. That is a good thing, but even though employers are laying off fewer people, we will need to see the April employment report to determine if hiring is actually picking up.
The weak revenue growth, the losses in the commodity complex, and the arrival of soft data of late are factors that may unfortunately keep many hiring decisions on hold.
