Stocks are starting the week on a positive note, despite earnings misses by both Caterpillar and McDonald’s. A bit of good news for investors this morning came when Dow component GE had its top rated grade for credit confirmed by Standard & Poor’s ratings agency, in spite of missing earnings expectations. From a technical standpoint, Stocks also held above an important support level at the 8,000 mark on the Dow.
However, the headlines are full of jobs being cut in all sectors - Home Depot announced a cut of 7000 jobs, Caterpillar announced they will be laying off 20,000, and the list goes on. This is reflective of the times, and because these cuts will happen over a period of time, we can expect that unemployment rates will continue to rise as these companies and others take cost cutting measures.
Existing Home Sales surprisingly came in a bit better than expected, at 4.7M when estimates were only for 4.40M. Perhaps the current low interest rate environment we are operating in - combined with firesale prices on many homes - is helping more homebuyers see the wisdom in finally getting off the fence. The arrival of this positive news is driving Bonds a bit lower in early trading.
