Early morning earnings reports from Citigroup and General Electric, and an update on General Motors' restructuring just after the opening bell, are the key hurdles for stocks Friday.
Google's after-the-bell Thursday earnings report could be a catalyst for Nasdaq and tech stocks, among the best performers Thursday. Google said after Thursday's bell that it earned $1.4 billion or $4.49 per share for the first quarter. Before special items, it earned $5.16 per share, well above the expected $4.93 per share.
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Citigroup and GE will be a test for the market. Citigroup, viewed as the weakest of the big banks, follows on the heels of two surprisingly good reports from JPMorgan Chase and Goldman Sachs. Citigroup is expected to lose $0.34 per share, compared to a loss of $1.02 per share last year. General Electric is expected to report a profit of $0.21, down from $0.44 per share the year earlier. Both companies have conference calls ahead of the opening bell.
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On Thursday, stocks staged a late-day rally, with the Dow gaining 95 to 8125, and the S&P 500 rose 13 to 865. The Nasdaq jumped 43 to 1670, on a big move in tech. The S&P technology sector was up 3 percent on the day.
"It's the Thursday before an expiration that's known for volatility and afternoon spikes, and that's part of what you're seeing. They're also warming up to GE earnings," said Art Cashin, director of floor operations at UBS.
Cashin said traders are hoping that Friday's reports will beat expectations as has been the case with a number of major companies, including JPMorgan Thursday.
"Citigroup is going to have to be Hercules to stay in the same game after you've got Wells Fargo last week, and JPMorgan this morning," Cashin said. Wells Fargo, in a preliminary report, said its earnings would be double expectations.
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General Electric is being watched for what it might reveal about its finance unit — but also because the company's industrial business is seen as an economic bellwether. GE owns NBC Universal, the parent of CNBC.
Brian Rauscher, director of portfolio strategy at Brown Brothers Harriman, said he is watching for comments on GE Capital.
"Is it accelerating or did it plateau in terms of writedowns or issues where they needed funding? If they're saying it's the same as it was in the last report, that's bullish," he said.
"I don't know if the actual number is important as far as the absolute number is not a disaster," said Rauscher.
For Citi, "it's a similar type of thing. Where are the charge-offs? Is it less bad? It just wants stability at this point, and stability means you're not blowing up," he said.
Peter McCorry, who trades bank stocks at Keefe, Bruyette, said the market has been tentative ahead of the bank earnings, including Citigroup and others in the coming week. "For the next couple of weeks, it's going to be react and wait. React and wait," said McCorry.
Also on Friday, General Motors gives an update on its restructuring at 10:15am ET. Consumer sentiment is the only economic report of the day at 9:55am ET.
Fed Chairman Ben Bernanke speaks at 12:30pm on innovative financial services for the underserved. He will not be taking questions after his comments to the Kansas City Fed's conference.
In the bond market Thursday, traders said it was encouraging that JPMorgan issued $3 billion in non-FDIC guaranteed bonds. The bonds priced at 350 above the 10-year.
The 10-year's yield climbed Thursday throughout the day, finishing at 2.83 percent. "I think a lot of this has to do with the fact we're in the inverse trade relationship. As stocks start to price better, bonds start selling off a little bit. I think you have consolidation right now," said Michael Franzese, head of the government bond desk at Standard Chartered.
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