RSS FEED

» Help

Subscribe to this RSS feed
Stay up to date with the Market Insider blog.

LATEST FROM OUR BLOGS

» More

- CNBC Video: Warren Buffett & Bill Gates - Keeping American Great

MORE HEADLINES

» Markets | Economy | Companies

- Shift Into High-Quality Stocks Could Move Market Higher

CNBC ON DIGG

Stay up to date with the Market Insider with Patti Domm

We’ll send the latest posts directly to you.

Subscribe to this RSS feed

How to use RSS?

Market Insider

Text Size

Apr.17

8:14 PM ET

Thursday, 17 Apr 2008

Market Insider/Friday Look Ahead

Posted By:Patti Domm

Topics:Currencies | Stock Market | Investment Strategy

Sectors:Oil and Gas

Google's good earnings news should put a shine into the market, and certainly into its stock in Friday trading.

Now Google [GOOG Loading... () ] makes the third big tech to surprise, and the question is, does three make a positive trend for the tech sector? There was Intel [INTC Loading... () ] Tuesday, raising its forecast, then IBM [IBM Loading... () ]Wednesday beating the street and raising its outlook, and now Google, which still seems to be firing on all cylinders. Google earnings rose 30 percent to $1.31 billion, or $4.12 per share, and its shares bounded as much as 18 percent higher in afterhours trade.

Scotsman Capital's Vince Farrell said Google's report should help send stocks higher Friday. Farrell said besides beating the street's estimates, it's important that Google continued to show strength in paid clicks, which were up 20 percent year over year. Paid clicks were also up 4 percent over the fourth quarter, compared to Wall Street's estimate of a 9 percent decline.

Group of Securities

Some important earnings reports will also be released ahead of the bell, including Citigroup and Caterpillar. Citigroup should continue showing damage from the credit crunch, and Caterpillar is a likely beneficiary of the weak dollar. Its CEO James Owen will appear on Street Signs at 2 p.m. Honeywell, Schlumberger, Xerox and Manpower also report.

There's no economic data of note Friday.

Just "Decent"

Thursday's market was sluggish, moving early in reaction to mixed earnings news. We had expected a "decent" day for stocks, and after Wednesday's big run up it was decent -- not good, not bad, just decent. The Dow was up a scant 1.2 points, while the S&P 500 scratched out a 0.8 point gain. The Nasdaq though was lower, losing 8.3 points on the day.

The dollar rose 0.46 percent against the euro, taking it to $1.5882, and it rose 0.85 percent against the yen. Oil fell 7 cents to $114.86, but not before setting a new trading high of $115.07 per barrel.

"I think the market was kind of reined in by tomorrow's (triple) expiration day, given the volatile trading we've had with everybody trying to sort through the earnings pictures. You've got Citi coming out tomorrow," said Art Cashin, director of floor operations for UBS in a phone interview Thursday.

"I think that people kind of stayed on a short tether today. The range of the market was not very big. They shrugged off the Philly Fed number, which was a little worse than people thought it was. Nobody wanted to risk a large short position," he said.

Check Out These Other Posts

Cashin said so far the earnings outlooks are not bad. Cashin said one thing stock traders are keeping a wary eye on is the bond market. "Over here in the stock market the sun is shining and the picnic is about to begin, and in the bond market they're nailing plywood to the windows. These spreads are way out from where they should be," he said.

The fall in two year Treasurys began in the morning after the three month London interbank offered rate surged. Treasurys fell, with the 10 year yielding rising to 3.729 percent and the 2-year rising to 2.111 percent.

Cashin also mentioned the shifting view in the markets about the Fed as fears about inflation build. The markets now expect less aggressive rate action by the Fed, and this view is not only in the Fed funds futures but in the attitude of traders.

"Certainly the stock guys, who are not the most knowledgeable in the area are looking for a 25 basis point cut and then a stop," he said. "They got a scare out of the PPI (producer inflation data) and they want to get out of aggressive rate cuts."

Fed speakers Thursday were pretty clear about inflation concerns. Richmond Fed President Richard Lacker said inflation is a problem, and it's too high. Meanwhile, Dallas Fed President Richard Fisher said trying to solve the financial industry's structural problems with more interest rate cuts will only worsen the situation by spurring inflation.

Questions? Comments?

Tools:

Print Email