Despite suffering mixed trading results at the end of last week, 2012 remains a positive year for investors. And the beginning of the third week hasn't disappointed yet, with all three major indices up, although they did trail off toward the end of the day. How Wednesday fares will probably depend on the pre-market releases of a handful of companies and one key economic statistic, the Producer Price Index (PPI).
But before we jump into this morning's events, let's see how the three largest indices fared yesterday.
|
Index |
Gain / Loss |
Gain / Loss % |
Ending Value |
|---|---|---|---|
| Dow Jones Industrial Average (INDEX: ^DJI) | 60.01 | 0.48% | 12,482.07 |
| Nasdaq | 17.41 | 0.64% | 2,728.08 |
| S&P 500 | 4.58 | 0.36% | 1,293.67 |
Yesterday was a relatively solid day on the market. The euro, gold, and oil all edged up slightly, and 10-year Treasuries suffered a minor decline. But today could be a lot more turbulent as 60 companies report earnings, many from the critical banking sector and one significant marker for the health of the American economy rolls out.
Let's start with that macro news, the PPI. It is essentially an inflation index, showing the wholesale price of finished goods. Like the Consumer Price Index (CPI), there is also a core number that strips out volatile food and commodity inflation. Analysts are expecting a benign 0.1 figure, as inflation is seemingly nowhere to be found in the liquidity trap currently consuming the broader economy, despite concerns by some that repeated Federal Reserve and Treasury action would create a high-inflation scenario. If we see a surprise here, however, it could send ripples through the markets.
The real story today will be earnings, specifically earnings from the banking sector, a critical barometer for the health of our economy.
Citigroup (NYSE: C) plunged 8% after disappointing with weaker-than-expected results, including a double-digit decline in earnings. The table couldn't be set much worse for Goldman Sachs' (NYSE: GS) report today. As we saw with Citi and fellow Wall Street titan JPMorgan Chase, a tough year for investment banking is likely to weigh on Goldman, and analysts expect trading revenue to decline. On the flip side, US Bancorp (NYSE: USB), a more traditional banking operation, is expected to show a 29% increase in earnings on only a 1% increase in sales. Banks with large retail presences appear to be faring better that than their high-finance counterparts, and with a number of banking institutions reporting we will see whether that remains true. Yesterday the Direxion Financial Bull 3X (NYSE: FAS) held up well, losing only 1.6% during normal trading hours, but with so many banks reporting, investors playing the leveraged ETF should expect a volatile day.
Stay tuned for our analysis on banking earnings and general market events throughout the day.
Watching the broad market each day is exciting, gut-wrenching, and stressful. If you're in the mood to pick up a great company to buy for the long term, The Motley Fool has created a brand-new free report: "The Motley Fool's Top Stock for 2012." It features a company hand-selected by the Fool's chief investment officer that has a strong future ahead of it. I invite you to take a copy, free for a limited time. Get access to the report and find out the name of this legendary company. The report is free, but won't be available forever, so check it out today!
