Fewer economic reports color a week that has been a mixed bag already. Earnings are still coming in and some of them are delivering surprising strength. Unfortunately, there are still more than a few possible disappointments mixed in. In the throes of these headline-making stories, the market has been trying to break out and hold above its recent range. Mix in a little testimony by Ben Bernanke, and traders may start waving a cautionary yellow flag.
Morgan Stanley’s reported quarterly loss and Yahoo’s less than stellar report may cast a pall over the recent news that big names like Wells Fargo and Goldman Sachs had strong quarters. It may come to pass that the apparently strong positives right out of the gate for this round of earnings did more harm than good. Some strong figures may have set the bar too high. Of course, companies like Apple – who are reporting earnings that beat expectations – may help bring some measure of support. However, heading into what may be a sluggish summer-holiday trading month things may stall rather quickly.
Following recent disappointments with regards to whether or not recovery is underway, it feels as though there is a lingering air of uncertainty that warrants caution. Confidence may be returning, but a strong catalyst in the form of a solid improvement in employment or housing data might be required to deliver any momentum. Bernanke seems to be echoing that idea of a wary approach. He cautioned yesterday that recovery may be coming, but will likely hinge on the twin concerns of housing and labor markets. Any additional remarks from Capitol Hill will likely be watched closely, as will the remaining earnings reports.
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Past Performance is Not Indicative of Future Results.
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