This morning the major market indexes are all trading lower to start the day. The catalyst for this early decline is poor earnings estimates by some of the largest corporations. Since this earnings season started stocks such as Alcoa Inc (NYSE:AA), Intel Corp (NASDAQ:INTC), and CSX Corp (NYSE:CSX) have seen negative reactions from investors after they reported earnings. Today that theme seems to be continuing.

It is also very important to note that when the market rallied higher after the July 4th holiday the U.S. Dollar Index was getting pummeled. The U.S. Dollar Index topped out on June 7th around $88.70. It then rolled over on the daily chart trading as low as $82.08 on July 16th. Today the dollar index is trading higher by 0.43 to $82.94. As we all know when the dollar bounces it will usually deflate the major stock market indexes. This morning that seems to be the case as the markets are trading sharply lower at the open.

As long as the dollar rallies watch for pressure on most stocks especially the commodity names. Should the dollar decline and sell off then it could obviously help to lift the major stock indexes as the markets will inflate. In any case it is prudent to expect this earnings season to be bumpy throughout the month.


Nicholas Santiago
Chief market Strategist