Key To Market? Big Cap Financials

Is there any doubt that big-cap financials are the key to this market? Despite earnings below expectations for Microsoft and Google, and a large writedown from Merrill Lynch,it was Citigroup beating expectations that moved futures up almost 15 points this morning.

This is crunch time for this little mini-rally--since the earnings news is mixed, it will be critical for the market to move sideways or up today, and avoid retracing any of the last two days gains.

Options expiration today.

Citi'sloss of $0.49 was better than the loss of $0.66 expected. Doesn't sound great, but things are getting better: they reported a loss of $1.02 in the first quarter, and a loss of $1.99 in the fourth quarter. Yes, there was $7.2 billion in writedowns, but even that is an improvement. As with Wells Fargo, net interest margin was a bit higher than expected. Up 9 percent pre-open.


1) Freddie Mac still trading up, despite the fact that the WSJ reported they were considering raising up to $10 billion in equity through a sale of common and preferred stock.

2) Meantime, Honeywellbeat on topline and revenues, and raised their guidance (it's in-line with estimates).

Aerospace sales (about a third of sales) were strong. Remember, all the aerospace companies got slammed in June on concerns that aerospace sales would be slowing globally. Up 4 percent pre-open.

3) Mattelalso beat expectations, up 12 percent.

4) Bank and credit card giant Capital Onereported earnings below expectations, down 2 percent pre-open.

5) Barr Labs, which had been a speculated takeover target for a couple days, is being bought by Teva for $7.46 billion, about $66.50 in cash and stock, a 42 percent premium to Barr's closing price on Wednesday. Teva is the largest generic drug maker in the world.

Questions? Comments?