Market Talk

US stocks meander through a quiet session, despite high-profile earnings from GE, Citi and BofA, and a well-received report on housing starts. (Video recap here.)

DJIA adds 32 (0.4%) to 8744, up about 7.3% on the week; S&P slips less than 1 to 940, Nasdaq Comp adds 2 to 1887. Big Board volume tops 5B shares. It’s the Dow’s best week since the 9% gain for the week ended March 13, when the rally started. The Dow rose every day this week, it’s longest winning streak since November.

This week’s sharp gains broke a four-week losing streak, and if you want more evidence that the risk trade is back on, look in the crude pits, where oil futures, down in recent weeks, also rose sharply this week, gaining 6%.

Continue reading…

Keep digging Pandie, there's a pony in here somewhere.

These big banks, you got to hand it to them. They really know how to lay it on, thick and heavy.

After all the backing they’ve received from the US government, all the myriad, unending support programs offered by the Fed, the banks’ self-congratulatory aggrandizements in their earnings releases are a bit galling.

Sales of assets by both Bank of America (BAC) and Citigroup (C) — resulting in billions in after-tax gains — saved both banks from reporting steep losses. But BofA credits strong revenue in its wholesale capital markets business, as well as in home loans for driving 2Q performance. Continue reading…

US stocks are on a tear as optimism about corporate earnings and economic data has driven the market higher each day this week. But while there’s much to applaud from this week’s performance, it’s still too early to say the recession’s over and economic growth is imminent.

The stock market’s bounce off the March lows just doesn’t have that bull market feel to it, former Merrill Lynch chief investment strategist Richard Bernstein says, in part because the prior bull market leaders – financials and energy – are leading the recent surge. He notes rallies aren’t usually led by the prior bull market’s leadership, but that seems to be what’s happening now.

“No one seems the least bit aware that leadership always changes during bear markets, but it hasn’t changed during the recent market upturn,” he says. “Either this cycle is going to be extremely unique and break a solid historical pattern, or this isn’t the bull market that many believe.”

Earnings continue to surprise to the upside but 2Q revenue has been more of a mixed bag, notes Miller Tabak equity strategist Peter Boockvar. “It’s a tribute to corporate America’s ability to keep a lid on costs and improve margins but also highlights the tough economic environment,” he says.

Continue reading…

Keep the faith, pilgrims.

What have we learned from the earnings reports of some of the nation’s largest banks this week? A few things.

It pays to be connected. It’s a lot easier to make money when you’ve got Uncle Sam covering your flank. Goldman, JPMorgan, Citi and Bank of America all benefited from raising capital that was guaranteed by the federal government, which certainly alleviated investors’ concerns.  Then there’s the Federal Reserve’s interest rates. The key overnight fed funds rate is effectively zero, which gives the banks a fat spread between what they pay to borrow money and what they charge in interest to lend it out.

Volatility is good – if you’re making a market. Goldman and JPMorgan both had very healthy profits from trading. When you’re charging a small fee to process trades, and you’ve got a so-called high-frequency program processing trade in split seconds, allowing you to process scores of trades, the direction of the trade doesn’t necessarily matter.

Continue reading…

I left my Blackberry at home; what could possibly happen today?

A lazy summer Friday? Not in the stock market.

Futures pits are pointing to a modestly lower opening for US stocks, amid what is for a Friday in the summer a lot of news to chew on. Investors are wading through a number of high profile earnings reports, as well as a report on housing starts. And then there’s the aftermath of yesterday’s bogus Roubini rally to ponder.

Today’s also an options expiration day, which could add to what’s already been a volatile week. S&P futures down 5.50; DJ futures down 33. Both have been bouncing around in negative territory. Ten-year flat, yield at 3.59%.

Continue reading…