Subprime Concerns Weigh on Financials, and Market

The market is under pressure this morning, on the heels of a disappointing start to earnings season. Alcoa (AA) reported lackluster earnings last night, while this morning we got earnings warnings from HD, SHLD, and DHI.

The HD and SHLD warnings indicate that things are weaker than expected in the retail sector. The 40% drop in new orders reported by DR Horton (DHI) is another indicator that the housing market has yet to reach a bottom.

Also, S&P is rumored to be on the cusp of downgrading $12 billion in subprime mortgages. This is putting more pressure on the financial sectors and brokers, while causing bond yields to drop further. The 10-year yield is now at 5.07%.

Oil was down at the open, but has since reversed higher. Asian markets were mixed overnight. Last, Bernanke is set to give a speech this morning on inflation. I expect more jawboning, even as the inflation indicators I follow are pointing to an easing of inflation pressures.