Oil companies have yet to cut production and capital expenditures amid low oil prices. But if oil drops furthers, that could change.» Read More
It's a big day for earnings, with most companies reports maintaining fourth quarter guidance. The primary concern of fundamental investors—that large corporations would revise down Q4 guidance due to slower global growth—is not materializing.
Some are able to maintain full year guidance because of strong beats this quarter.
Take Ingersoll Rand, a multi-industry company with a strong beat over consensus. It reported earnings per share of $1.10 versus expectations of $1.04. The company makes heating and air conditioning, refrigeration through Thermo King, security systems and power tools. About 40 percent of revenues are outside the United States.
Thermo King bookings were up 20 percent due to strong orders in truck and trailer markets. Ingersoll Rand's guidance for the final quarter of the year is slightly below consensus, but because of the 6 cent beat in the current quarter, the company has maintained the midpoint of their full-year guidance at $3.22. Fiscal year guidance is $3.20 to $3.24.
Stocks rally big. Why the melt-up? Some of this may be hedge fund desperation.
Oh, I know the story, I've been saying it for the last two days: 1) Fed is perceived to remain dovish, along with the ECB, which will start to get creative with expanding its balance sheet, 2) oil has stabilized and 3) Ebola fears have eased.
Does this mean the coast is clear? Of course not.
Old-school industrial companies are reporting good earnings, and they are not lowering guidance, despite exposure to Europe.
Today, Illinois Tool Works beat earnings expectations and slightly raised the midpoint of its 2014 guidance.
This is a classic multi-industry company. They are big in automotive, commercial food equipment, welding equipment, building materials, testing equipment, adhesives, lubricants and janitorial products—nerdy stuff you don't even notice, but things that we use every day. This was an impressive quarter, given that nearly 30 percent of their revenues are from Europe.
The markets are starting the week far calmer than last week. Three things have changed.
First: Wall Street is expecting the Federal Reserve to be slightly more dovish when it meets next week. Last Thursday, St. Louis Federal Reserve Bank President James Bullard said the Fed should consider delaying the end of its bond purchase program to halt the decline in inflation expectations, and although nobody expects it to keep the program going there is a substantial minority who believe they will leave in the phrase saying rates would likely remain low for a "considerable period."
Second: Oil has stopped dropping and is now simply languishing in the low 80's. Energy stocks have stabilized.
Third: Ebola concerns have eased. It was a huge relief that 43 of the 48 people on the original watch list in Dallas have passed the 21-day incubation period and appear to be in the clear. I've said many times that it is very difficult to model Ebola. It could be a trivial event, or it could prove to be a huge issue. If isolation procedures are beefed up--and if, as we are told, it is not an air-borne illness and it is unlikely it will mutate into one that could be, that will go a long way toward calming down everyone.
IBM with a big miss, and abandons its 5-year plan for $20 in earnings by 2015.
A big miss: $3.68 versus expectations of $4.31, $22.37 billion in revenues versus expectations of $23.36 billion.
Read MoreIBM on earnings: We're disappointed
Ginni Rometty said in a statement: "We saw a marked slowdown in September in client buying behavior, and our results also point to the unprecedented pace of change in our industry."
The doves are flying. Is there any doubt that, when it really comes to who influences markets, central banks rule the world?
Stocks in Europe moved up right after the open there. An European Central Bank board member, Benoit Coeure, said the ECB will start purchasing assets within days and that additional accommodation was available.
Separately, the Bank of England's chief economist, Andrew Haldane, said "interest rates could remain lower for longer, certainly than I had expected three months ago."
Then, this morning China's central bank said it would inject up to 200 billion yuan ($32.8 billion) into 20 large national and regional banks.
The SEC has charged a small firm, Athena Capital Research, with using rapid-fire trades in the final seconds of the trading day to manipulate the closing prices in some NASDAQ-listed stocks.
The SEC alleges Athena used an algorithm called Gravy to "mark the close." It traded on the order imbalances that occur at the end of the day. When there is an imbalance between buyers and sellers, NASDAQ routinely runs an auction to fill the order imbalances at the best price at the close. Athena, the SEC says, placed orders to fill imbalances, then traded shares on the market prior to the close on the opposite side of the order.
The trading occurred in a short period from June to December 2009.
While the firm is small and the fine of $1 million is not much, I think it is important symbolically.
We don't care. Markets shrug at a positive report from Goldman Sachs and good weekly jobless claims. Stock futures dropped after strong weekly jobless claims came out at 8:30 a.m. EDT.
What do they care about? They care about not getting run over. They care about buying on the news and then finding themselves down 2 percent 15 minutes into the open.
They also seem to care about oil. Futures dropped to the lows of the morning just as U.S. oil dropped below $80, about 7:10 a.m. EDT.
Where's the bottom? Unfortunately, it isn't clear. Sure, many sectors are dramatically oversold, but any market watcher will tell you markets can remain overbought or oversold for a long time.
Here's what's hurting stocks: no growth in Europe, slower growth in China, deflation concerns (oil), Ebola, ISIS, disappointing U.S. Retail Sales data and what appears to be the demise of major M&A deal between Abbvie and Shire.
That's a lot for the market to deal with. Little wonder that the CBOE Volatility Index is over 30 for the first time since 2011, and the S&P 500 is down 9.8 from its historic intraday high, which it hit September 19th.
The 10-year yield hovering near 2 percent has been a real weight on financials, which are hurt by lower rates. The S&P Financials sector (XLF) is the weakest of the 10 S&P sectors; large U.S. banks were down 2 to 4 percent midday.
The futures were weak going into the Retail Sales report at 8:30 a.m. ET, but it wasn't that weak: down about 9 points from yesterday's close.
Then the disappointing Retail Sales hit at 8:30 a.m., and futures dropped another 9 or so points. At that point, we were down about 18 or 19 points.
But within 10 minutes of the open, the S&P was down 40 points.
There's a slew of things pros on the Street believe that just don't seem to make a lot of sense.
Wall Streeters traded their Bloomberg terminals for guitars and sunglasses to rock out for a good cause this week.
The market is acting as if the mid-October swoon never happened, despite a general sense of caution on Wall Street.