Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Stock Markets Shake Off Poor IBM Report to Continue Rally


Today's financial recap and tomorrow's financial outlook.

For the first time in weeks it was a relatively calm day for financial markets. The S&P 500 future only traded in a range of 25 points, which is the smallest since September 30. Similarly, trading volume on US exchanges was the lowest since September 29. The Japanese Nikkei index gapped up 4% overnight thanks to a report from the Nikkei newswire that the country's Government Pension Investment Fund (GPIF) would reduce its government bond holdings by 20% to 40% of total holdings and increase local equity holdings to 25% from 12% currently. Many market participants had expected that the increase in Japanese equities would be smaller, which prompted the rally.

Although the road was rocky, US equities were able to build off the positive performance from Friday and rally up into the 200-day moving average for the S&P 500 (SPX). Oil traded around unchanged today, and a late morning selloff attempted to derail the equity gains. Similarly, most energy stocks were weaker today, for the second consecutive session. The best performing sector of the SPX was consumer staples, followed closely by utilities and materials, with all 12 rising today.

US Treasuries traded in both directions, first rising alongside strong performance from their European brethren, then giving up some of those gains as the day progressed. The 2yr Treasury was the strongest performer today.

IBM (IBM) reported earnings early in the morning and it sent a shockwave across markets with S&P futures initially dropping 12 points. The major tech company reported that it had seen a "marked slowdown in September in client buying behavior, and our results also point  to the unprecedented pace of change in our industry." The poor anecdotes matched up with similar comments from Microchip Tech's (MCHP) management two weeks ago. IBM said that it would not meet its goal of $20 in EPS each year in fiscal 2015, a promise it made in 2010.

Apple (AAPL) reported earnings after the close, which included the results from the highly anticipated iPhone 6 Plus sales. It reported revenue, earnings, and iPhone unit sales that were well ahead of Wall Street's expectations, along with very impressive guidance. The stock was up about 1% in post-market trading and it had rallied 2% during today's session.

Tomorrow's Financial Outlook

The main story overnight will be China's third quarter GDP report. Investor expectations for growth are poor, although a sharp drop may embolden the view that the government will have to be more active in its support of the economy. Keep in mind that local Chinese equities have rallied strongly throughout the quarter thanks to a number of "small scale" easing measures from the government and central bank. Economists are expecting growth to drop to a 7.2% annual rate from 7.5% in the prior quarter. September retail sales, industrial output, and fixed asset investment will also be reported.

In the US tomorrow, the only economic report is September existing home sales. The existing sale contracts are expected to rise to an annualized rate of 5.1 million from 5.05 million in the month prior. The only other piece of housing data released this month, the NAHB survey of homebuilder sentiment, fell to an index level of 54 from 59 in the month prior (for the month of October).

Twenty four major US companies are scheduled to report earnings tomorrow, and almost all of them are significant. Coca-Cola (KO), Harley-Davidson (HOG), McDonald's (MCD), Lockheed Martin (LMT), Regions Financial (RF), Verizon (VZ), Yahoo! (YHOO), E-trade Financial (ETFC), Broadcom (BRCM), and Discover Financial (DFC) are some of the notables.

Twitter: @Minyanville

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos