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 , 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 , 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.
The Banking Crisis is Over
"There's no doubt that the banking crisis is over and we’re very unlikely to have a wholesale funding crisis like last year’s," said Nick Carn from Odey Asset Management. But financial problems have been transferred to the public sector, he said.
Expecting a Slow, Arduous Climb
Analysts are waiting for cash in the sidelines to come flowing into the market, but it won’t happen—we’re going to see it trickle in instead, said Chris Johnson of Johnson Research Group. “The market is going to continue to challenge the upper levels of the technicals, which are around the 950 levels, and we’ll slowly waddle away at the overhead resistance. It will be a slow, arduous climb higher,” he said.
Energizing the Economy
Michael Splinter, CEO of Applied Materials said the energy and environment sectors are what will propel the economy in the next 20 to 40 years as they will create numerous jobs. “Solar is one of those areas that, if we can manufacture in the U.S., it will create hundreds of thousands of jobs,” he said.
______________________________
______________________________
CNBC's Companies in the News:
Morgan Stanley
Wells Fargo
- Wells Fargo Profit Rises, Credit Losses Up
General Electric
- GE Capital Pulls Back From US-Backed Debt Program
(GE is the parent company of CNBC and CNBC.com)
Bank of America
- KBW Now Says BofA Won't Face $12 Billion Charge
Avon
______________________________
