Tuesday, January 26, 2010

Street Grapples With Earnings and Lingering Global Concerns

The bulls showed some resiliency yesterday, rebounding somewhat from last week's steep decline, and stocks are nearly unchanged in late-morning action as traders are grappling with some generally better-than-expected earnings reports in the US, while digesting some uneasiness overseas. Asian shares moved lower and dampened early trading on Wall Street on lingering concerns about China's efforts to rein in liquidity, while a downgraded outlook from Standard & Poor's on Japan's sovereign credit rating, which followed the closing bell in Asia, added to the morning's apprehension. Meanwhile, stocks have come off the worst levels of the day as traders are digesting a plethora of major earnings reports, headlined by generally better-than-expected profit releases from several Dow members, along with bottomline announcements from Apple and Texas Instruments, which both exceeded the Street's estimates, while US Steel reported a larger-than-expected loss. Some on the Street are treading with some caution ahead of the Federal Reserve's monetary policy announcement tomorrow. Treasuries have pared an advance that came
from the aforementioned early economic uneasiness and following a report that showed US home prices fell more than expected, and after consumer confidence improved for a third-straight month. Overseas, European shares have overcome early weakness on the heels of a disappointing UK 4Q GDP report following a better-than-expected reading of business confidence in Germany-Europe's largest economy.

Global Economic Concerns Weigh on Sentiment

After slightly rebounding yesterday from last week's solid declines, stocks are back under some pressure as concerns about the impact of tighter lending in China on the global economic recovery are resurfacing to pressure sentiment in early trading. Additionally, uneasiness regarding Japan's sovereign credit quality on the heels of an outlook downgrade by Standard & Poor's and a smaller-than-expected increase in 4Q UK GDP are adding to the global economic concerns. Meanwhile, stocks have come off the worst levels of the day as traders are trying to digest a plethora of major earnings reports, headlined by mixed profit releases from several Dow members, along with bottomline announcements from Apple and Texas Instruments, which both exceeded the Street's estimates. Some on the Street are treading with some caution ahead of the Federal Reserve's monetary policy announcement tomorrow and ahead of a key report on consumer confidence. Treasuries are gaining ground in morning action amid the aforementioned economic uneasiness, and following a report that showed US home prices fell more than expected. Overseas,
Asian markets came under solid pressure, while European shares are also in red despite a better-than-expected reading of business confidence in Germany-Europe's largest economy.