The markets moved lower today ahead of the much-anticipated earnings season. The Dow closed lower on the day by 190, the S&P 500 sold off 17, and the Nasdaq closed lower on the day by 44.
Earnings season is slowly becoming the focus again. It is not expected to be a good one. Starting later this week with the large banks, earnings are expected to show growth of only 4.3% for the first quarter for the S&P 500, with revenue in the 5% range. Investors will be looking for names to beat and also raise their forward guidance to offset the weak expectations.
Sector News
The large banks (XLF ) were lower on the day, holding back the broad markets as the sector continues to struggle with overhead resistance. The XLF has traded in a wide and sloppy range for the better part of the year so far and up until this week had shown decent strength and volume, which investors felt may be enough to push through resistance.
Regional Banks (KRE ) also sold off a touch this week after a very impressive bounce off lows. From the Federal Reserve's decision to leave rates unchanged, which caused a drop of over 12%, the KRE has managed to recover almost 10% all in one "V-Shaped" bottom. Many investors felt this bounce came a little too far too fast and would welcome a small pullback or consolidation.
Oil started to see a little weakness following news that Russia will be looking to boost production at the next meeting of the OPEC nations. Traders note the continued backwardation pricing phenomenon, where oil is technically more expensive in the short term and less expensive in the long term. This historically leads to more oil flooding the markets in the short term, which could support a pullback in prices.
Industrials (XLI ) continues to be a weak spot so far this week mostly thanks to Boeing (BA ) and their continued woes. The XLI has about 70 names in the space, with Boeing being the largest position at about 8.5%.
Stock News
Disney (DIS ) shares were higher today after being upgraded by Cowen and Associates to outperform. The analyst comments were more focused on the short term, saying that Thursday's investor day will be a positive, momentum-building event going forward. Shares moved to their highest levels of the year, now higher by about 7%.
Boeing (BA ) shares were lower on the day again after holding the Dow back on yesterday's decline. Overnight a story emerged that a Chinese aircraft leasing company had put a hold on 100 737 max jets, but shortly after it was found to be untrue. Shares were still lower on the day, headed back to the lows set following the grounding of the jets.
US Steel (X ) shares were lower on the day today after a downgrade from Credit Suisse. The analyst says they have a weakened competitive position which sent shares back towards 52-week lows.
