Market Talk

Lot of ground to cover in today’s show: big stock rally, earnings, the falling dollar and the rising (very, very slowly) yuan. Today’s special guest is Mike Ryan, chief investment strategist at UBS Wealth Management.

Apologies for the light posting, I’ve been really consumed in getting the live Markets Hub off the ground. Hopefully soon we’ll settle into a  steady pattern, and I can get back to some writing.

US stocks tumble in a harried session, driven by fear over the continuing crisis at Japan’s Fukushima Daiichi nuclear power plant, as a small band of engineers races to avoid a catastrophe. The situation in Japan is still chaotic, and it’s clearly having an effect on investors.

Indexes went into a tailspin late in the morning after the EU’s energy commissioner suggested the situation at Fukushima Daiichi was out of control; the rebounded somewhat after Tokyo Electric, which runs the plant, appeared close to hooking up a new power supply that could run the pumps that provide water to cool the nuclear fuel.

Nikkei futures were down sharply, but also recovered some ground.

At the close, DJIA loses 242 (2%) to 11613, falling as much as 300 points intraday, S&P 500 slides 25 (2%) to 1257, Nasdaq Comp tumbles 51 (1.9%) to 2617. NYSE volume is heavy. Nasdaq, S&P now down for the year; Dow is close. Dow’s now down bit more than 6% from February highs.

For the Dow, it was the biggest drop since Aug. 11; the index has lost 431 points, or 3.6%, the last three sessions, and is down seven of the last nine sessions. All 30 of the index’s components fell today.

All ten of the S&P 500′s sectors fall, with tech and industrials falling the most. Materials and financials are close by. Tech’s fall was amplified by Apple, which got a rare downgrade, from JMP Securities, albeit to only neutral. Still, it was the first downgrade on the stock since October.

A lot of focus was on the Japanese yen, which hit a record high against the dollar as money continues to flow into the currency. Whether that money is for repatriation, or just speculators, isn’t completely known.

Today we’re talking about the bull run’s two-year anniversary, and where it may go from here. We have Tomi Kilgore on again, and he’s a sharp guy. Good stuff in here for pros and neophytes alike.

I really considered having us all wear party hats. But it just didn’t seem very dignified, not when there are people being killed in Liyba as we speak. Plus, we didn’t have any party hats to wear anyhow, so it was kind of a moot point.

Apple and IBM’s earnings (blow out earning, in the case of the former) can’t overcome the market’s general malaise today, as Goldman’s earnings and the housing-starts report were two notable disappointments.

The big headline earnings report disappoint the market, Steve Jobs is taking a medical leave, but the stock market soldiers on. Go figure.

- More than 80% of companies that reported earnings have topped analysts’ estimates. But don’t get too giddy. “After all, ‘better than expected’ could simply reflect the low level of the underlying estimates and the strength of the actual data,” Pragmatic Capitalism says.

- Is fresh, massive stimulus via QE2 really necessary? The Reformed Broker blogger Josh Brown isn’t so sure. He notes companies continue to report decent earnings. And more disturbing is the fact that “outside of home prices, inflation is becoming more and more of a reality…The propping up of the dead and the dying via federal spending and zero percent rates is not warranted with markets and prices rebounding elsewhere.”

- On the other hand, the risks of not engaging in QE2 are too great, James Picerno writes at The Capital Spectator. “Calling on the Fed to stand pat risks repeating the mistakes of monetary history,” he says. “We have to deal with the pressing threats as they arrive, and worrying about runaway inflation today is
premature, and perhaps more than a little dangerous. The day for fighting that battle will come. But not now.”

- Credit Suisse notes much of the earnings season move for equities might be over, despite the fact that there’s plenty of reports still to come. “Our Portfolio Strategy team finds the bulk of the impact of earnings on market performance seems to occur in the first two weeks of earnings season, which ends today,” firm says, according to MarketBeat.

- As the reviews pour in regarding Windows Phone 7 devices, so far so good for Microsoft (MSFT). NYT’s Bits blog posts a roundup of reviews. The new lineup of phones are getting “overwhelmingly positive reactions,” blog says. “It’s still unclear if this will translate into sales or make it possible to attract customers away from existing platforms.”

- Hulu’s considering slashing price of Hulu Plus — its subscription service still in beta mode — to $4.95 per month from $9.95, MediaMemo blogger Peter Kafka reports, citing sources.

- Latest iPad rival hits the market. H-P releases its $800 touchscreen tablet computer.

- FCC weighs in on the Cablevision/News Corp dispute over Fox.

- Deal Journal’s Shira Ovide looks at the best and worst deal Apple ever made.

- WSJ profiles the state of Jay-Z’s empire, the rap monger who’s worth an estimated $450 million.

And you thought today would be all about earnings. Nope, it’s really all about the dollar (and am I nuts, or is the central bank in China coming to the rescue of the dollar, at the same time as the central bank in the U.S. is doing its best to cut it down to the size of a postage stamp. Strange days.)

US stock futures softer premarket, with the dollar strengthening and euro easing back below $1.39 again.

IBM and Apple results late yesterday didn’t measure up to high expectations, both stocks retreating premarket. Reports from Goldman Sachs, Coke and J&J also due before the open. BofA 3Q features $10B non-cash goodwill charge, stock lurching between positive and negative terrain premarket.

September housing starts due at 8:30 a.m. ET. BAC up 0.6% after earlier falling more than 2% premarket; AAPL off 4.9%; IBM down 3%.

S&P futures off 7.60, DJ futures down 41. Ten-year note a shade lower, yield at 2.53%.

US stocks close higher as Citi’s earnings and a better-than-expected measure of home-builder confidence prompted investors to move into risky assets.

DJIA rises 81 (0.7%) to 11144, led by BofA’s 3% rise and JPMorgan’s 2.8% gain. Blue-chip index posts first gain in three days and hits its highest close since May 3. S&P 500 gains 9 (0.7%) to 1185, behind a 2.3% rise in the financial sector. The broad measure has risen in six out of the last seven sessions. Nasdaq Comp increases 12 (0.5%) to 2481.

Financials on fire after suffering big losses at the end of last week. Citi jumps 5.6%, Wells Fargo rises 5.5% and Fifth Third gains 3.4%. Dollar started the session higher, but as stocks rallied, the dollar fell and the euro rose, continuing a familiar theme.

Focus shifts to earnings. Apple and IBM both fall in after-hours trading even as results exceed expectations. That’s what happens when these stocks are priced to perfection. IBM had been up 16% since August and Apple was sitting at an all-time high of $318 a share prior to results. But Apple only sells 4.2 million iPads and 9.1 million iPods. Shares fall 6.3% in late trading. And IBM’s outsourcing signings fall more than expected in 3Q and shares drop 3.9%.

Next up, BofA, Coke and J&J all scheduled to report quarterly results.