Stocks Backslide as Earnings Season Starts

Thursday ended up being an odd day for equity markets where the NASDAQ soared 1.7%, but the large cap S&P 500 and small cap Russell 2000 only gained 0.7% and the Dow finished flat. This morning finds US index futures pulling back 0.2%-0.5% as traders assess the first day of earnings season with results from big banks. With markets having moved up so much in recent months there have been questions of how high have expectations been built into stock prices and would investors be looking to add positions or take profits against news.   

Disappointing Chinese trade data which saw both imports (-1.9% vs street +1.2%) and exports (-7.5% vs street -3.0%) decline and disappoint weighed on Asia Pacific trading overnight, particularly the Hang Seng which fell 2.2%. European markets are up this morning, with the FTSE rallying 1.5% and the Dax climbing 0.9%, boosted by better than expected UK industrial production.

Gold continues to soar to new heights, gaining another 1.6% today and blasting through $2,400/oz. Copper is also rallying, with a 2.1% gain so far today. US Crude Oil is bouncing back with a 1.5% gain while Natural Gas is down another 0.75%, adding to yesterday’s losses.

Initial reactions to today’s first wave of earnings from Financials have been mixed. JPMorgan Chase is down 2.5% premarket despite beating street expectations on both revenues and earnings ($4.44 vs street $4.11) and posted a smaller than expected provision for loan losses ($1.9B vs street $2.7B).  Wells Fargo, meanwhile, is down 0.8% despite beating the street on EPS ($1.26 vs street $1.11). Asset manager Blackrock, however, is up 2.5% premarket after posting stronger than expected earnings ($9.81 vs street $9.40). Results are still to come from Citigroup and State Street today.

It’s a quiet morning for economic news. US Consumer Sentiment is due at 10:00 am EDT today. Monday brings US Retail Sales and results from brokerages Goldman Sachs and Charles Schwab.

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