Markets were relatively quiet yesterday even as IBM had a massive earnings and revenue miss, a miss that is believed to be company specific. For the third quarter, S & P 500 profits are now expected to rise by 5.9%, an upward revision from a 4.8% gain expected on October 10. Sales are still projected to rise by 4.0%.
Reporting season rapidly accelerates the next three days as over 20% of the S & P 500 is reporting. Will these reports stem the four week slide, the longest drop since August 2011?
As noted many times, the markets are entering into seasonal strength, strength that could be perhaps amplified by the outcome of the midterm election in two weeks.
All must remember, the markets historically outperform with a Democratic Congress and Administration for such have a greater propensity to spend. This is a major reason why many on Wall Street have an affinity and support the Democratic Party for historically this Party injects more funds in the economy, hence greater economic activity and stock prices.
But the current Administration and Congress has taken this thought to a new level, amplified by crushing and daunting regulations that greatly hinders the propensity to take any risk. Many are petrified of the regulatory entities with most believing such organizations are now strictly adversarial in nature versus ones’ used as a resource. Most government organizations have been co-opted by partisan agenda driven bureaucrats versus level headed administrators.
It is thought, maybe some wishful thinking, a change in Washington’s power structure will reduce the regulatory environment, or at least the attitude of such organizations where the mantra is the same as “hang the pirate at the town’s gate to intimidate all.”
Enough of the rant, today’s trading will be dictated by the plethora of earnings reports existing home sales.
Last night the foreign markets were up. London was up 0.94%, Paris up 1.81% and Frankfurt up 1.57%. Japan was down 2.03% and Hang Sang up 0.08%.
The Dow should open moderately higher as earnings are exceeding expectations. The 10-year is off 3/32 to yield 2.21%.
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