We have a weak start to the day, with mixed reports on the earnings as well as jobs fronts. Add to that Japan’s rating downgrade, and the market may have plenty of reasons to pause on its way to Dow 12,000. 

We will be looking ahead now to Friday’s GDP report to give us enough strength to make a concerted move on that front.

 

On the economic calendar, we had weekly Jobless Claims and December Durable Goods reports coming before the open. And both reports turned out to be disappointing.

 

On the earnings front, we literally had a deluge of reports this morning, with the overall tone generally on the soft side, in my view.

 

AT&T barely beat on EPS and came a hair short of revenue expectations. More important however, AT&T failed to meet expectations for new subscriber additions. Proctor & Gamble’s results weren’t much different from AT&T’s, with an EPS beat and revenue shortfall. The consumer products giant appears to be faced with serious margin issues, with gross margins coming short of expectations. Colgate-Palmolive had similar results. DR Horton, the homebuilder, missed on all counts. Railroad operator, Kansas City Southern, beat on EPS, but missed on the top line.

 

On the positive side, Caterpillar sprinted past earnings and revenue expectations. The mining and construction giant guided higher on the back of a strong outlook for Asia and Latin America. Defense contractor Lockheed Martin also came out ahead on both counts. After the bell, we have Microsoft and Amazon reporting results.

Given this overall soft news flow, the market will most likely shy away from making a move in the Dow 12,000 direction. Let’s see what tomorrrow’s GDP has in store for us.

Sheraz Mian

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