Earnings season began this week, and stocks haven't responded positively even if the numbers are coming in better than expected. Alcoa (AA), JPMorgan Chase (JPM 1.94%), and Wells Fargo (WFC 1.24%) all reported earnings that were slightly better than expected, and the Dow Jones Industrial Average (^DJI 0.67%) still fell 2.1%, and the S&P 500 (^GSPC 0.87%) was down 2.2%.
AT&T (T -1.21%) was the market's biggest loser this week after falling 5.9%. The stock was responding negatively to Softbank's offer for a majority stake in Sprint Nextel (S), which could bolster the company's balance sheet. Sprint has always been the third wheel to AT&T and Verizon Wireless, but an investment from Softbank could offer strategic advantages. There's no word on exactly what Sprint's plans would be, but AT&T could be in for more competition.
Home Depot (HD 0.22%) fell 5.8% on the week because there was falling hope in the housing recovery this week. The stock wasn't helped by an analyst downgrade on Thursday, either. Home Depot's stock may have just gotten ahead of itself after a great run over the past year, so a pullback when the market retreats isn't surprising.
Intel's (INTC 0.61%) slow and steady decline continued this week. The stock fell 5.3% ahead of the company's earnings report next week. Competitor AMD (AMD 1.36%) cut quarterly revenue and profit guidance this week, echoing reduced expectation from Intel. It's been a tough few weeks for chip stocks, and next week we'll hear how Intel did in the third quarter and find out how the fourth quarter looks. Buckle up until then.
Stocks had a rough week, but economic data and earnings have been fairly strong this week. Long-term, this will drive stocks forward, so I don't think this week's negative sentiment will last if earnings continue to beat expectations.
