Weak Earnings From FedEx Weighs On Sentiment

The market is under more selling pressure this morning. The broker index is down the most, after Morgan Stanley (MS) reported earnings that beat estimates, but revenues fell short. FedEx (FDX) also reported disappointing results due to sluggish demand and soaring energy prices. The firm gave 2009 guidance that was well below consensus, hurting the stock.

Nearly every major sector is lower so far this morning. The Dept. of Energy said that crude inventories fell slightly last week, which would normally push oil prices higher. But oil is trading lower after the report, testing the $133 level.

The banks are also under pressure. Yesterday, Goldman (GS) made comments that U.S. banks still need to raise considerable amounts of capital. Today, Fifth Third Bancorp (FITB) announced that it is going to raise $1 billion in capital, sell some assets, and also cut its dividend by 66%. The financials continue to struggle, and I am not looking to bottom fish in these stocks.

Asian stocks were mostly higher overnight, led by a +5% surge in China on bargain hunting. The dollar is flat vs. the Yen and Euro, and the 10-year yield is lower at 4.16%.

Investor angst is running very high. The ARMS Index hit 2.24 this morning, and is still just below 1.50; the CBOE put/call is very high at 1.13, and the ISE call/put is equally bearish at 88. Combined with the weak open, I think this sets us up for a market that should erase some of its early losses into the close.

long GS