Market Insider: Friday Look Ahead
The stock market, easily swayed by earnings news, has its sights set on General Electric Friday. GE releases its earnings and plans a conference call with analysts ahead of the market open.
The GE earnings come a day after Microsoft took investors by surpriseby releasing a disappointing earnings report ahead of the opening bell, hours earlier than expected. Microsoft also said it was laying off 5,000 workers, an unusual move for the tech giant and one reason the company may have moved up the timing of its release. On top of the gloomy numbers and deep cost cutting, Microsoft said it will not provide forecasts for the rest of the year.
Microsoft's bad news came on the heels of weak earnings releases from Nokia and several financial companies. But it was Microsoft that really bit into market sentiment. The stock closed down nearly 12 percent, its lowest level in 10 years.
After the bell, Google showed just how mixed the tech picture has been this quarter. It joined Apple and IBM with better-than-expected results.
Other companies reporting Friday include Harley-Davidson, Schlumberger, and Xerox.
"GE is such a bellwether. It's in so many areas," said Todd Leone of Cowen and Co.
"There's been a lot of rumors about GE and its finance unit. I hope they have good earnings. If they have bad earnings, it will hurt the market because they touch so many businesses. I'm keeping my fingers crossed," said Leone.
GE, the parent of CNBC, is expected to report earnings per share of $0.37. GE shares, often trading in tandem with financials, moved higher Thursday ahead of its earnings report. GE has seen its stock pummeled, in part, on concerns about further losses at its financial unit that could damage its credit rating.
The financial sector was once more slammed, dropping nearly 6 percent Thursday. Disappointing earnings was a common theme. Fifth Third, Huntington Bancorp and SunTrust were all lower after earnings.
Bank of America shares were also weaker. The company ousted John Thain, ceo of its recently acquired Merrill Lynch unit. At the same time, hundreds of workers were laid off at Bank of America Securities in New York Thursday as part of the integration with Merrill Lynch.
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Ironically, Thain was one of the executives showing support by buying Bank of America stock Wednesday. On Thursday alone, that stock declined by 14.5 percent. CNBC's Charlie Gasparino reported that Thain also spent a bundle decorating his office at Merrill Lynchwhen he replaced its former shamed CEO Stan O'Neal. He also reported that New York's Attorney General is eyeing a batch of bonuses Merrill distributed last month, just days before its merger with Bank of America.
On Friday, there are no major economic reports though focus will remain on Washington where Congressional leaders are expected to meet at the White House in the morning. Investors will be watching for any headlines on the stimulus package, expected to come up for vote next week.
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The Senate Finance Committee cleared Timothy Geithner's appointment as Treasury Secretary Thursday, and his nomination is expectedto come up for a vote Monday.
Stocks were rocky Thursday. The Dow fell 105, or 1.3 to 8122, while the S&P fell 1.5 percent to 827 and the Nasdaq fell 2.8 percent to 1465. Leone said the S&P is finding support around the 800 level. But he said for the market to move up, financial stocks have to participate. "You want to see it rally up through the 50 day on the S&P which is 870. I think we just need to get going again. It might take a little while," he said.
Bonds were mixed Thursday as investors bought the shorter term bills and notes but sold longer term issues. The dollar was flat against the euro but 0.8 percent lower against the yen.
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