Stock Market: Down but Not Out

Last Update: 18-Apr-11 08:59 ET

The stock market is set to begin the week on a negative note.  Earnings can't be blamed for that disposition as Citigroup (C), Eli Lilly (LLY), KeyCorp (KEY), Halliburton (HAL), and W.W. Grainger (GWW) all exceeded consensus earnings estimates.

Various reports suggest the prevailing reasons for the negative slant include concerns about slower growth due to rising gas prices and China's tightening efforts, which have been extended with another 50 basis point hike in the required reserve ratio for its banks starting April 21. 

Additionally, the wires are hot with speculation that a Greek debt restructuring is inevitable.  Greece has downplayed the idea, but then again it also downplayed at one time the idea that it would need a bailout.  In brief, when market participants think of Greece, "opa" is not a word that comes to mind.

In general, the market has a wait-and-see feel to it this morning.  It knows this is a short week with the Good Friday holiday at the end of the week, yet it is very aware that this will still be a heavy week of earnings reporting.

According to Thomson Reuters, 110 S&P 500 companies are expected to report earnings this week, so one should begin to have a sense of whether corporate America is feeling profit margin pressures in a meaningful way (or is expecting to feel them) as we head into the long weekend.

The economic calendar this week is on the light side -- literally and figuratively -- since it is filled mostly with housing reports that are expected to reinforce the view that the housing market is still light on the rebound.

Oil prices will remain a focal point, as they reflect not only the market's preoccupation with geopolitical concerns but also their link to gas prices.

Oil prices are down this morning (-$1.41 at $108.25) despite reports Saudi Arabia cut its March output on the belief oil markets are adequately supplied at this juncture. 

The drop in prices in the face of that report would suggest economic slowdown concerns are taking precedence today as a market driver.  That could all change tomorrow or even before the end of the day.  The same can be said for the stock market, which hasn't shown a lot of conviction in either direction of late.

Currently, the S&P futures are 0.4% below fair value.  In other words, they are down but certainly a long way from being out.