EmailBoth Goldman Sachs (GS) and JPMorgan Chase (JPM) handily beat Capital IQ consensus earnings estimates when they reported their fourth quarter results this morning. Goldman beat by a whopping $1.96 while JPMorgan beat by $0.20. Notably, the cash market is still indicated to open lower.
The lackluster response is somewhat surprising, yet altogether understandable given other developments that are acting as headwinds for the broader market. In particular:
- Boeing (BA) is indicated to open nearly 4% lower in the wake of reports that two of Japan's top carriers have suspended all 787 Dreamliner flights
- Chipotle Mexican Grill (CMG) is indicated to open down 8% after issuing an earnings warning for the fourth quarter.
- The World Bank has cut its 2013 global GDP growth forecast to 2.4% from 3.0%.
- Currency war concerns are creeping to the forefront following yesterday's warning from Eurogroup head Juncker that the euro is "dangerously high;" and
- The debt ceiling issue continues to hang like a wet blanket
Separately, we suspect market participants are also showing some reserve knowing the results from Goldman and JPMorgan -- but Goldman in particular -- have failed to move the market.
Good earnings news has long been expected out of the financial sector, but it was uncertain how the stocks would respond following a huge run ahead of their reports. Goldman is indicated to open about 2.0% higher while JPMorgan is indicated to open about 0.3% lower.
The mixed response is stirring thoughts that tempered reactions could be the norm this reporting period since many stocks had a big run to start the year.
Much can change with a lot more time left in the trading day -- and a lot more time in the reporting period -- but if the financials aren't going to run strong on good earnings news, the broader market may be easily distracted by other factors with a negative orientation and fall prone to profit taking.
On a related note, Japan's Nikkei sunk 2.6% in a profit-taking move triggered by continued strength in the yen that weighed on the country's exporters.
The US market is on track to open lower by about 0.4%. Nothing major, but also nothing in the wake of big earnings beats out of the financials.
Today's CPI report was exactly in-line with Briefing.com consensus estimates. Total CPI was unchanged in December while core CPI rose just 0.1%.
The gasoline index weighed on the all items index, but increases in food and shelter costs served as an offset.
On a year-over-year basis, total CPI is up 1.7% while core CPI is up 1.9%. Similar to yesterday's PPI report, those respective levels aren't going to raise any alarm bells at the Fed.
The Industrial Production report for December (Briefing.com consensus +0.2%; prior +1.1%) will follow at 9:15 a.m. ET and the Fed's Beige Book report will be released at 2:00 p.m. ET.
Reflecting the guarded tone in the equity market at this point, US Treasuries are posting early gains. The 10-yr note is up 10 ticks, bringing its yield down to 1.81%.
