Wachovia (WB) Weighs On Financial Sector

The market is under slight selling pressure in early trading after Wachovia (WB) reported disappointing earnings.

The 5th largest bank reported a 14 cent loss vs. expectations for a 40-cent gain. They also cut their dividend by -40% and are raising $7 billion in capital to shore up their balance sheet. This is weighing on the bank index, which is currently down -3.1%.

One I don't really get is Blockbuster (BBI) is offering between $6-8 to acquire Circuit City (CC). Huh? Are there some synergies between renting movies and selling electronics that I don't know about? Seems like a move out of desparation, but I don't see how it works.

Asian markets got whacked overnight on continued worries about U.S. economic growth. The dollar is lower this morning vs. the Yen and Euro, and oil and gold are both higher again.

The 10-year yield is up slightly to 3.47%; the put/call ratio closed Friday at the high level of 1.29, and it is currently still high at 1.20.

The winners so far today are again the energy and materials stocks. Natural gas stocks are rallying strong, and all of the agribusiness stocks are hitting fresh new highs.

I think lots of traders are gearing up for a rough earnings season after the GE report on Friday. This weeks kicks off the busy part of earnings season with many big bellwhether tech companies reporting all week.

But the market has worked off its overbought condition, and is now in a better position to rally again. I don't like that the SPX closed below its 50-day on Friday, but we'll have to see if there is any follow through.