The buy-the-dip trade was put on ice yesterday as the market struggled under the weight of growth concerns and continued selling interest in economically-sensitive areas. The losses left the S&P 500 down 3.0% for the week.
Today, the media is fixed on Boston and understandably so as it has been confirmed that one bombing suspect is dead and that the other is at-large following an early-morning shootout. A massive manhunt is currently under way.
Everything else is taking a backseat to that news, yet there has been a lot of breaking news in the stock market since yesterday's close with an influential lineup of companies reporting their first quarter results.
By and large, it was more of the same. Plenty of positive surprises on the bottom line despite plenty of top-line results that spoke to tepid demand.
IBM (IBM), Google (GOOG), Microsoft (MSFT), Schlumberger (SLB), Baker Hughes (BHI), General Electric (GE), Honeywell (HON), Kimberly-Clark (KMB), McDonald's (MCD), and Briggs & Stratton (BGG) were among the luminaries out with results.
In that group, only IBM and Briggs & Stratton fell short of the Capital IQ consensus estimates while only Google (GOOG) and Microsoft (MSFT) managed double-digit revenue growth. With respect to Microsoft, it is worth noting that non-GAAP revenue for its Windows Division was flat after adjusting for the recognition of revenue related to the Windows upgrade offer.
|Briggs & Stratton||BGG||-11.5%|
IBM's miss, which came despite a hefty tax-related boost, was the first of its kind since 2007. Big Blue is trading 4.0% lower in premarket action and will be a weight on the broader market, as will McDonald's and GE, both of which failed to impress with their overall reports.
Nonetheless, the S&P futures are trading 0.2% above fair value and are pointing to a modestly higher start for the cash market.
Some reports suggest the positive disposition stems from the rebound trade in many Asian markets overnight that was paced by China. Reportedly, regulators there are looking at a plan to attract more foreign investment by possibly adding "A" shares to international equity indices. The Shanghai Composite jumped 2.1% today.
Many European bourses are also trading higher, but have seen some backtracking on a headline saying German Finance Minister Schauble thinks the ECB should reduce liquidity in the euro area.
The attention to foreign markets as a bullish catalyst is mostly background noise.
The positive bias in the futures market is most likely tied to the buy-the-dip mentality on this options expiration day. How the market closes, though, will matter more than how it opens. Another failed buy-the-dip attempt would add to the cautious tone going into the weekend.