(By Rich Bieglmeier) What an exciting, interesting day. To start the day, we learn that Jobless Claims continue their slow return to 400k, coming in at 386K, but for sure to be revised up. Then, we find out that a mandate is a tax, and hospital stocks rock. To wrap up the day, Nike Inc. (NKE) misses earnings, badly, and drops more than $10 in the aftermarket.
Of all news, the Nike news is likely to have the biggest, immediate impact. A bellwether, market leader getting squeezed by a slowdown, especially in China and rising costs aided by a higher dollar. The mix is sure to have Wall Street a bit freaked out about second quarter earnings. As we wrote in advance of Nike's earnings, the athletic wear company had missed once in the last 16 quarters.
If NKE missed, then lesser companies are suspect to disappointment.
The markets dropped to a new, intra-week low during the day, only to rebound, and once again finishing up within the week's range - in essence, once again, not doing too much. iStock thinks that could change on Friday with the Nike earnings announcement.
If profit worries move to the forefront, then investors can expect stocks to show more weakness than strength until earnings season gets rolling. That won't happen until the second week of July.
Between here and there, big economic news reports can stem the tide or turn it the indexes into a waterfall. Starting Friday, Personal Income & Outlays will be especially scrutinized follow Nike's miss. Later in the day, the Chicago Purchasing Managers Index will be announced. Both better be rock solid, more bad news could be difficult to ignore.
And then, shortly after the Market opens on Monday, the ISM Manufacturing Survey results will be released. A lot of major news announcements in a short window when traders‘ nerves could be shaky.
If the indexes close Friday at a new week low, then the NASDAQ, Dow, and S&P could be on the second leg of a round-trip back to their respective 200-day moving averages of 2,792, 12,379, and 1,299 respectively.
We haven't even mentioned that Germany continues to say no to forking up more taxpayer money and Stockton, California becoming the largest municipal bankruptcy in US history, neither of which should embolden bulls at the opening bell.
Despite all the bad news, iStock has been shocked before to see algorithms disregard negative sentiments and rise in the face of peril.