Stocks were higher Monday, but the Dow, up just 0.1 percent, lagged other indexes because of the outsized impact of IBM.
IBM was down more than 7 percent on earnings news, but its report was seen as company specific, not a general comment on technology. The S&P 500 was up 0.9 percent at 1,904, and the Nasdaq was 1.3 percent higher at 4,316.
Treasury yields were lower, and the creep higher in European yields continued to be a concern though U.S. markets were far calmer after last week's dramatic selloff in stocks and swings in bonds.
Larry McDonald, head of macro strategy at Newedge, said he's watching Europe, where Greece exiting its bailout remains a risk and is sending ripples across the continent. Credit default swaps, while off last week's highs are still elevated for Italy, Spain and France.
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McDonald said the market will continue to be driven by international events. "I don't think the earnings season is going to overpower the things that drove the 10-year to 1.87," he said. The 10-year yield was lower at 2.19 percent Monday. In Europe meanwhile, yields rose with Greece's 10-year at about 8 percent. Italy's 10-year was yielding about 2.59.
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"The market is being driven by systemic risk in Europe, deflation in Europe, global economic slowdown. I don't think the earnings are driving the market right now. If earnings are driving the market, we would have a pullback like we did," McDonald said. He noted the S&P 500 is now just 5.7 percent from its high, retracing nearly half its intraday decline to 1,820. "If those credit conditions in Europe don't improve, it's a vicious headwind for equities," he said.
Earlier, Goldman Sachs strategists wrote in a note they expect the stock market to bottom with the S&P 500 between 1,850 and 1,890. They also said they expect corporate buybacks to increase after the earnings season. With an average 25 percent of buyback activity in November and December, that should help stocks reach their target of 2,050 on the S&P 500 by year end, they wrote.