The bears have been predicting that March-quarter earnings were going to be a problem for the indices and they were partially right today. 3M (MMM) , United Parcel Service (UPS) and Tesla (TSLA) put up some ugly reports, while Facebook (FB) and Microsoft (MSFT) posted very strong numbers.
What was particularly surprising was that Facebook and Microsoft moved even higher although they were already technically extended. They finished closer to the intraday lows than the highs but it was very strong action.
The big problem Thursday was that these two stocks did nothing for the broader market. Breadth was around 2,800 gainers to 4,400 decliners and there was plenty of weakness. However, the dip buyers did show up about an hour into trading and had the indices back up nicely by midday. There was some late slippage but no major damage.
This action was very mixed, raising the question whether it is indicative of a change in character. That should be answered to some degree by how Amazon (AMZN) and Intel (INTC) trade Thursday tonight.
Amazon's EPS was way ahead of expectations but revenues and guidance were in line. The stock popped big initially but quickly gave back gains. It looks like there is some inclination to "sell the news." We'll see how that develops.
Intel is reacting very poorly so far as it lowers forward guidance. The stock is down about 6% initially and that will affect the semiconductor sector as well.
Like 3M, Intel is often a more important leader than the FAANG names as they are more reflective of the broader economy than internet-related stocks.
While it is early, so far I do not like the reaction to these reports and am concerned that this is another clue that that we may see some downside action developing.
The bulls keep finding support and even on a day like this they managed some impressive midday buying. However, without more big earnings reports to rely on, it will be difficult to keep pushing this market higher.
Have a good evening. I'll see you Friday.