EmailThe equity market trudged through Friday's session with little to show for it at the end as the S&P 500 closed pretty much unchanged for the day.
Investor conviction is lacking today, too, although the early indication suggests a slight downward bias for stocks at the open. Analyst downgrades of IBM (IBM), Verizon (VZ), and American Express (AXP), as well as weakness in Apple (AAPL), which reportedly cut supply orders for iPhone 5, have been limiting factors.
In general, there is a wait-and-see mentality in the marketplace. The S&P 500 sits at a five-year high just as the fourth quarter earnings reporting period is set to pick up steam. Participants are eager to hear the guidance coming out of those reports, which can either be a catalyst for an extended breakout or a cause for a breakdown.
The blended earnings growth rate for the fourth quarter compiled by FactSet has slipped to 1.5% from 9.2% at the end of the third quarter.
Based on the low reading of the CBOE Volatility Index, which is at a multi-year low, and the rising level of margin debt, which is at at its highest level since February 2008, it can be argued that market participants aren't feeling overly anxious about the prospect of the market selling off on negative news -- earnings, economic, political or otherwise.
It could be viewed as wishful thinking in hindsight, yet the market continues to take its lead from dovish Fed officials like Chicago Fed President Evans, a voting FOMC member this year, who didn't give any reason in a speech overnight in Asia to think the Fed will be withdrawing its accommodation anytime soon.
On a related note, Fed Chairman Bernanke will be speaking at 4:00 p.m. ET today. That could keep the market in check today since his comments will hit the wires when the market closes, meaning any real response will have to wait until Tuesday's session.
There aren't any economic releases today, but things pick up noticeably starting with the Retail Sales and PPI reports tomorrow and concluding with the University of Michigan Consumer Sentiment report on Friday.
Most foreign markets have registered modest gains. China was a major exception. The Shanghai Composite surged 3.1% following reports that China's securities regulator said the quotas for foreign investors could be increased as much as ten times.
Could is a conditional word, but true to form the Chinese market took the idea and sprinted with it as if it was a done deal.
The US market for its part continues to spin its wheels.
--Patrick J. O'Hare, Briefing.com
