Market Drivers: Earnings, Apple, Bernanke

Apple iPhone 5 White

Apple iPhone 5 White (Photo credit: ீ ๑ Adam)

Markets have struggled to make any meaningful moves this week as earnings season kicked into full gear. US debt ceiling concerns continue to cast a shadow on market sentiment, and the week’s economic data has not sparked a whole lot of enthusiasm. Can the market continue the move to the upside and test October ’07 highs?  Or are we going to see a winter pullback?  Here are three topics that influenced the market this week:

Earnings, Earnings, Earnings

Plenty of earnings hit the wires this week, featuring a host of results from the banking & financial sector. Here are high and lowlights: Both Goldman Sachs and Blackrock were rewarded nicely after handily beating on both lines. JPMorgan Chase started their earnings day sharply lower after posting a mixed report (beat EPS, missed on rev.) but rallied into the bell to close on the plus side. Bank of America narrowly beat on EPS, but missed on revenues, shares were down 3% on the news. Those with disappointing numbers include Citigroup and Northern Trust Corp who both came under heavy pressure after announcing weaker than expected results on both lines.

Apple takes a hit

On Monday Apple shares fell sharply, breaking through the $500 level and trading as low as $438.38 on Tuesday (1/15). The selloff was sparked by a report that the Technology giant had cut component orders for the Iphone5, creating speculation that sales of the popular phone was weaker than anticipated. Shares rebounded on Wednesday after some members of the analyst community came out in defense of the stock, saying they see the stock as “deeply undervalued” at current levels.

Bernanke Takes the Stage

While the market had little reaction following the Fed Chairman’s Monday afternoon (1/14) comments, he did shed some light on the economy and economic policy.  The Chairman said he still isn't satisfied with the U.S. economy's progress and plans to stick with the unconventional programs the Fed is using to lift output. He also played down concerns that the Fed’s aggressive bond buying program will lead to higher inflation, but indicated the Fed has the tools to exit its “easy” policy stance before inflation appears. So while the recent recovery appears to be moving forward, the US remains in a “relatively fragile recovery.” Regarding the trillion dollar coin issue, he noted that over the weekend both the Treasury and Fed indicated that this was not the right way to deal with the debt ceiling issue. He expects Congress to raise the debt ceiling.

On a lighter note,  Fortune magazine released their 2013 top 100 Companies to Work For, with Google claiming the top spot for the 4thconsecutive year. I’m thinking the roller hockey rink, basketball courts, horseshoe pits and free massages might have something to do with that……

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