RALLY FINALLY ENDS AS COMEBACK FIZZLES IN FINAL MINUTES: Here's What You Need To Know

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Mixed emotions today, as bullish sentiment was offset by disappointing earnings and weak Chinese economic data.First, the scoreboard:

Dow: -40.7 pts, -0.4%
S&P 500: -3.6 pts, -0.3%
NASDAQ: +15.5 pts, +0.6%

And now, the top stories:

  • Investors’ exuberance was reflected in the huge stock market rally we’ve experienced since the beginning of October.  Today, the AAII told us that bearish investor sentiment fell and bullish sentiment is at the highest level since July.  However, sentiment is often a contrarian indicator.
  • Overnight, China said its trade surplus shrank for the second month in a row, reinforcing fears of a Chinese slowdown.  The IMF also reduced it’s growth estimates for Asia, citing weakness in the European and U.S. economies.
  • JP Morgan reported disappointing earnings this morning and the stock closed down 4.8%.  The initial headline earnings figure suggested the banking giant beat analysts’ estimates.  But we quickly learned there was a lot of noise in the numbers, including the controversial debt valuation adjustment.  Behind the unusual items was a bank whose business has suffered from macroeconomic concerns including those coming out of Europe.  The rest of the banking sector followed JPM lower. Bank of America and Citigroup fell 5.5% and 5.3%, respectively.  Morgan Stanley shed 4.4%.
  • Europe, however, is inching closer to a resolution.  Earlier today, Slovakia voted in favour of EFSF expansion.  It was the last of the 17 Eurozone countries to greenlight the deal.
  • Today’s U.S. economic data included initial jobless claims and trade gap data, which were nothing to write home about.  Jobless claims climbed modestly to 404k, which was just a hair below the 405k expectation.  The U.S. trade gap was flat at $45.6 billion, which was roughly in line with economists’ estimate of $46 billion.
  • Research In Motion finally got its Blackberry service back online after outages around the world.  Now, the tough part begins as management works towards restoring its customers’ confidence.  RIMM shares declined 1.1%.
  • Yahoo! shares spiked mid-day after Bloomberg reported that private equity giants KKR and Blackstone we’re among the players considering buying out the Internet company. However, the stock lost some of its gains, closing up only 1.0%.
  • Sources told Bloomberg that Google was not considering a takeover of Akamai.  Google beat estimates on earnings and the stock jumped 6% after the bell. Read full coverage here >
  • Don’t Miss: GOLDMAN: These Are The Highest Quality Stocks In The World

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