Market Talk

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The DJIA breaks its winning streak, as sellers finally drive prices down, after another heavy dose of earnings reports that aren’t as rosy as earlier ones, and Bernanke spars with Congress again. (Video recap here.)

DJIA falls 36 (0.4%) to 8878, breaking a string of seven rising sessions. S&P 500 slips 1 to 954, Nasdaq Comp extends its winning streak to 11 sessions, rising 10 to 1926. Crude slips as well, as do Treasurys.

Morgan Stanley, Wells Fargo don’t paint the strongest pictures, although Boeing manages the trifecta of topping expectations and boosting top and bottom lines. The technicals are still a strong pull for the indexes, but keep an eye on the fundamentals as well.

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Recession, what recession?

That’s the sentiment surrounding Apple (AAPL) after it reported 3Q earnings and revenue ahead of expectations and said it can’t supply enough iPhones and Macs to meet demand.

Apple’s iPhone sales were outstanding. It sold 5.2 million devices in the quarter, which is more than seven times what it sold a year earlier, due in part to the new version of the device as well as the slashed price point on the older one.

Even more impressive was the company’s gross margin of 36.3%, which is just a smidge lower than the March quarter of 36.4% – AAPL’s highest in seven quarters. Apple CFO Peter Oppenheimer says margins were driven by execution as well as component costs that didn’t increase as much as expected.

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Bulls and bears dueling it out in midday trading as upbeat earnings from Pfizer (PFE) have offset results from Morgan Stanley (MS) and Wells Fargo (WFC) that didn’t live up to the high expectations Goldman Sachs (GS) set last week.

Even though stocks haven’t shown any signs of conviction in either direction, the bulls have had a lot to cheer about recently. As of last night, nearly 72% of companies who’ve reported earnings have exceeded expectations, ahead of the 62% beat rate last quarter, Bespoke Investment Group says. (S&P puts the number at 62%.)

“Investors were worried heading into this earnings season that last quarter’s numbers would be difficult to top, causing the market to struggle, firm says. But the current earnings season has come in much stronger than last quarter, which helps explain the last seven consecutive days of gains for the Dow.

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Have some alpha, it's free!

This rally’s been so fast and furious, the Dow’s up 9.4% in less than two weeks, that a pullback is bound to ensue soon (today’s looking pretty likely.) In fact, some folks have been expecting one since late last week. But as they says, markets tend to take the path of least resistance, and for whatever reason, that path has been up – in a straight line.

But when markets shoot up like this, they can and sometimes do shoot right back down, and Morgan Stanley is warning investors who are suddenly banking on a V-shaped recovery to be wary (incidentally, amid a recession that has already last 18 months and shows few concrete signs of abating soon, it should be obvious to all but the most dedicated huckster that a V-shaped recovery flew out the window shortly after Lehman Brothers’ swan dive.)

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Eventually, the Dow’s winning streak will end. And unless the bulls circle the wagons, it could be today.

Early tone’s soft given the mixed picture from the banks, but it shouldn’t be a surprise considering the tear stocks have been on lately. In fact, Morgan Stanley equity strategists now say it may be time to take some money off the table as investors seem to be pricing in a V-shaped recovery, and “equities could face more than just a technical correction.”

Quarterly earnings reports should remain the driver for US stocks in the continued absence of any meaningful economic data. Morgan Stanley, Wells Fargo and Boeing among those due to report before the opening bell; Pfizer, Altria, Delta Air already out.

Boeing managed to boost both the top and bottom line, but things don’t look so hot at Morgan Stanley, Wells Fargo or Bank of New York, all three of which are down in premarket trading after posting 2Q numbers.

S&P futures off 9.30; DJ futures down 71. Ten-year slightly lower, yield at 3.49%. Crude futures down more than $1.