A Whiff Of Bear In The Air?

U.S. stock markets declined again yesterday as investors fretted over the potential for a weak earnings season and new warnings of slowing global growth from the International Monetary Fund. Overall, it was a weak session with a particularly somber close as major indexes tried to rally in the last half hour but failed.

In notable news, Wells Fargo (WFC) was sued by the U.S. Attorney in New York for damages that could total in the millions for alleged mortgage fraud. Wells Fargo joins JP Morgan (JPM) in facing government law suits.

Apple Computer (NASDAQ: AAPL) slipped into the correction zone as the tech darling is now more than 10% down from its recent record high to close today at $635.85. The widely watched stock’s chart has taken on a waterfall look in recent days after peaking in mid-September.



Earnings season got off to a mediocre start as Alcoa (AA) reported a loss, although still managed to beat expectations that were focused on a larger potential loss for the aluminum maker as adjusted earnings came in at 3 cents/share.

Yum! Brands (YUM) also reported yesterday and showed a jump in Q3 income as sales improved and the company raised its expectations for the rest of the year.

In Europe, things were decidedly less rosy with German Chancellor Angela Merkel going to Greece as the country continues negotiations designed to meet austerity demands from its creditors. Dr. Merkel received a less than warm reception from the Greeks as they demonstrated in the streets while the European Stability Mechanism, the region’s formal bailout fund, was put into full operation.

A report this week from the International Monetary Fund, cast gloom across global markets again yesterday as the body forecast ongoing problems in Europe which include slowing growth and news that some troubled countries, including France and Spain, are going to miss their deficit cutting goals. Europe is seen to be entering a recession while overall global growth will also slow.

Major U.S. Index ETFs:

Dow Jones Industrial Average (NYSEARCA:DIA) -110 points/-0.8%

S&P 500 (NYSEARCA:SPY) -0.99%

Nasdaq 100 (NYSEARCA:QQQ) -1.6%

Russell 2000 (NYSEARCA:IWM) -1.25%

Bottom line: Major U.S. indexes and ETFs continue to struggle at resistance levels and in the face of relatively dismal global economic forecasts and lukewarm earnings reports. This earnings season is widely expected to be the weakest in years which could add headwinds to the recent rally. Interestingly, yesterday marks the 5th anniversary of the date that the S&P 500 (NYSEARCA:SPY) reached its all time high of 1565. The question for now has to be, “when will we see that level again?”

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