EmailThe month of April is typically a good period for the market. The Stock Trader's Almanac tells us it has been the second-best performing month for the S&P 500 since 1950 with an average gain of 1.5%. After last week's 1.0% decline, it will have some making up to do in coming weeks if it wants to pad that historical record.
At the moment, the market is indicated to open modestly higher with the S&P futures trading 0.2% above fair value.
The recognition that the market battled back from large losses on Friday, aided with a late burst of buying interest, has been a stabilizing factor for the market this morning.
Other positive influences include the favorable disposition of European markets despite a warning from Portugal that more spending cuts are going to be necessary in order to meet its budget goals, relative headline calm regarding North Korea's militaristic bluster, and word from General Electric (GE) that it is going to buy Lufkin Industries (LUFK) in a $3.3 bln cash deal that carries a hefty 38% premium for LUFK shareholders based on Friday's closing price.
Buyers, however, are showing some reserve, cognizant that the first quarter earnings reporting period begins tonight with Alcoa's (AA) report after the close. The latest report from FactSet indicates that first quarter earnings for the S&P 500 are expected to decline 0.6%.
Participants will be listening keenly to company guidance and how it meshes -- or doesn't -- with weaker-than-expected economic data seen of late. A wave of cautious-sounding guidance could prompt some more concerted selling interest given that many stocks have run sharply on the notion that growth momentum will be accelerating in coming months.
There isn't any economic data today, yet the economy will be a focal point throughout the week with the earnings reporting, the release of the FOMC Minutes on Wednesday, speeches from several Fed officials, and the Retail Sales report for March on Friday.
Fed Chairman Bernanke is speaking tonight in Atlanta on the topic of maintaining financial stability. That's an important topic, yet his appearance is likely to be upstaged by the men's NCAA college basketball championship which is also taking place tonight in Atlanta.
In other developments, the Nikkei surged another 2.8% on Monday, overcoming bird flu fears that reportedly kept other Asian markets under wraps, and JPMorgan Chase has downgraded Johnson & Johnson (JNJ) to Neutral from Overweight.
