Good earnings reports trumped economic news last week, and stocks rallied strongly to break the recent downtrend line that had been in place since April. Fed head Ben Bernanke gave the markets a short bout of concern mid-week when he characterized the outlook for the economy as “unusually uncertain,” but the negative sentiment quickly faded as corporate results continued to come in strong. (more…)

Earnings reports started to flow steadily from corporate America last week, and results were generally good. In contrast, investor reaction to the reports was fairly tepid. Let’s jump straight into the numbers. Industry heavyweights reported last week. According to Barron’s, earnings grew 76% at JP Morgan Chase (JPM) and 51% at railroad company CSX (CSX). Tech bell-weather Intel (INTC) beat most analysts’ estimates on profits, and, believe it or not, posted record revenues. Think about that: Intel had never achieved quarterly sales as high as they did in the last quarter. (more…)

When playing poker, experts look for something they call a “tell” in their opponents. It could be a certain frown, or a sigh, or pursed lips or any number of other subtle things an opponent does when he is either feeling like he has a good hand or a bad hand. The expert then tries to exploit that “tell” to win hands of cards. (more…)

I hope you had a wonderful Independence Day. I know that I caught up on plenty of rest and relaxation while leaving a little time for celebration as well. Prior to the celebrations, though, investor nervousness took major domestic stock markets to new yearly lows. While unwelcomed, this wasn’t a huge surprise. After all, traders focused on the short term usually sell prior to long holiday weekends and volumes decline. (more…)

The long awaited financial reform bill that has been in the making for almost two years looks like it is almost complete. It has yet to be voted on by the full Congress, but the bill has made it out of conference and will likely be signed into law before President Obama’s deadline of July 4th. (more…)

Most world stock markets rebounded broadly last week with all of the major U.S. indices closing higher. Most of the strongest performing sectors—technology, oil & gas and industrials—were the more economically-sensitive sectors that tend to do well during expansions and poorly during recessions. The exception was the normally-stodgy utilities sector which was up more than 4% on the week. (more…)

Consider two economies. Economy A has just experienced a scientific breakthrough that will probably increase productivity substantially in the years to come. Its public finances are strong, it is generally at peace with the rest of the world and it has been growing strongly. Economy B is just coming out of an economic shock like it hasn’t seen in decades. It has budget deficits as far into the future as the eye can see and unattractive borrowing costs. It is in seemingly-endless conflict with the rest of the world and growth is slow. If you could only invest in one of them today, which one would it be? (more…)

Major stock markets looked as if they would post another weekly gain until we got the unemployment report on Friday. While on the surface a declining unemployment rate and monthly job gains of 431,000 sound good, market participants didn’t see it that way. The problem is that 411,000 of the hires were census workers, and those workers will be let go once the census count is over. The private sector added only about 41,000 jobs, a disappointing number. (more…)

Given the 24-hour news cycle of constant doom-and-gloom, I have a question. If you hadn’t seen the table above and I asked you, “What did the market do last week?” what would you have answered? Up? Down? Booming? Crashing? While the Dow Jones Industrial Average was down slightly last week, the broad market (S&P 500 and DJ U.S. Total Stock Market Index) was actually up. It was a mixed week overall, but with the wide price swings, it didn’t feel that way. I ask the question above in hopes that you, the reader, will consciously think about your own perceptions about investing. Are you affected by the doom-and-gloom news cycle? (more…)

The S&P 500 finally reached official correction territory last week after losing more than 10% since its April 23rd peak. There is plenty of bad news to spook investors (European debt problems, Korean tensions, a bear market in China, the Gulf oil spill, etc.), but little will crush optimism as quickly as remembering the feelings we had during the credit crisis of 2008. That was an emotionally and monetarily painful time for many people, and that pain doesn’t just go away. This, however, isn’t 2008. (more…)