Stocks briefly bounced back from a lower open Wednesday, but financials fell after Morgan Stanley and Wells Fargo issued disappointing earnings. Both stocks declined, even though the Wells profit appeared to beat consensus estimates. Traders seemed to be focusing on the sustainability of the Wells numbers, while Morgan's loss was much broader than expectations. Another heavy earnings calendar will shape the market's day again. Read and listen to what the experts had to say...
S&P, Dow Likely to Fall From Here
If the market doesn't start to hustle now, the S&P and Dow are likely to fall from here onwards, and we could see a new bear-market low, said Chris Locke of Oystertrade.com Management. “I cannot be encouraged from here on for buying this market as we’re completing the sideways move from last October/November into August,” he said. “Seasonally and cyclically, the markets should head lower once we enter the period of August.”
Counterpoint: Equities to Rise in Q4
The fourth quarter will be a positive quarter for equity investors, said Roger Groebli of LGT Capital Management. “The earnings season confirmed that all the interaction by the government and central banks bear some fruits,” he said. “The investor sentiment is shifting from doubt to belief.”
Jobless Situation Could Threaten US Recovery
Paul Donovan of UBS said the jobless situation is a risk to U.S. recovery, but not a large risk. “Rising unemployment is distressful for those involved, but the real economic damage is done by the changing behavior of people who’ve got jobs,” he said. “So as long as people feel relatively secure in their incomes, we probably don’t see too much damage from the further rises of unemployment that will come through.”
Out of Panic, But Not Out of Crisis
“Chairman Bernanke is a student of the Great Depression” and knows that the depression's extended presence was due to policymakers easing off the throttle too fast, as well as tax increases and protectionist policies, said Michael Yoshikami of YCMNET Advisors. "Bernanke is trying to be a voice of reason, and letting people know that we’re out of panic, but not out of crisis,” he added.