Daily Data Flow: Stocks Fall; Dollar Rises on Fed Easing Expectations; Earnings Season Looks Like Train Wreck

Daily Data Flow

Stocks Fall on Possible Stimulus Cut (Bloomberg)

Stocks slid today, sending the S&P 500 to a nine-week low, after Chinese equities entered a bear market on the concern a cash crunch may hurt growth and as investors considered the impact of a possible reduction in the Federal Reserve’s monetary stimulus. “[Fed Bank of Dallas President] Fisher’s  comments seemed to dial back some of the negative rhetoric that people had in terms of Chairman Bernanke’s comments last week,” Michael James, a managing director of equity trading at Wedbush Securities Inc. in Los Angeles, said. “This remains a trader and sentiment-driven market that’s susceptible to swings in either direction at the drop of hat.”

Dollar Rises on Fed Easing Expectations (Reuters)

Rising expectations that the Fed’s monetary policy will scale back in the near term catapulted the dollar to its highest peak today — its best in nearly three weeks — against a basket of currencies.  “The optimism by the Fed fell in sharp contrast to other prominent central banks, such as the Bank of Japan, Bank of England, European Central Bank, and Reserve Bank of Australia, which are seeking measures to thwart a further economic slowdown to their respective jurisdictions,” said Ravi Bharadwaj, market analyst at Western Union Business Solutions in Washington.

Earnings Confession: Season Looks Like Train Wreck (CNBC)

The confessional, which is the time when Corporate America starts letting shareholders know the truth between earnings perception and reality, will reveal that the season so far has been a train wreck. More specifically, earnings pre-announcements have been pretty ugly so far, running about 7 to 1 negative to positive, which is the worst level since the first quarter of 2009. The reason for this, according to Citigroup chief strategist Tobias Levkovich, is that “the global economy [during the first quarter of 2009] was sitting on the edge of the abyss undergoing a financial crisis and near systemic meltdown.”

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It is looking like the stock market turmoil that kicked into high gear last week has rolled over to the current trading week, as concerns about China have continued the sell-off. Aside from the latest economic readings that point to a continued contraction in the China manufacturing economy in June, concern is rising about liquidity in China.

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