Markets Growing Impatient With Washington
The markets are lower again in early trading. The last couple of days have seen mild pullbacks, but this morning's selling pressure is more pronounced than we have seen. It is still early in the day, but the market seems to be growing increasingly frustrated with the delays in getting something done in Washington with respect to the debt ceiling.
Earnings reports have continued to come in strong for the most part. Amazon (AMZN) topped estimates and the stock is hitting all-time highs. Boeing (BA) and Aetna (AET) were strong also. Where we have seen weakness has been in the optical industry, and that likely hurt Juniper (JNPR) last quarter, as networking stocks have been laggards.
Asian markets were lower overnight, and Europe was down this morning. I think more than the debt ceiling, the continuing problems in Europe and the banks over there is weighing on investor sentiment. The euro is lower today on concerns about financials in Italy, U.K., etc.
Commodities are mixed, with oil trading lower to $97.65 but gold trading higher once again to new highs near $1625.
The flight to safety is not boosting Treasury prices today. Treasuries are lower, pushing the yield on the 10-year up to 2.96%. I think if the bond market were really worried about the debt ceiling, you would see these yields well above 3.00%, probably closer to 3.25% at least.
The VIX is getting jumpy this morning. It was more than 10% higher earlier, getting as high as 22.50. It has currently eased off from those levels, and is hovering around 21.85.
Trading comment: I still think that this whole debt ceiling show will prove to be a headfake for the market. Today is day 3 of this recent pullback, although the S&P 500 still remains above its 50-day average. (50-day for SPX = 1310). As the market continues to pullback, I want to continue to look for places to put money to work. I think the earnings picture remains strong, and that once this bit of uncertainty is behind us the markets should firm up and trade higher.