Oct 14 - Closing report

I was beginning to doubt my pre-market expectations when the Dow had dropped 260 points at 2:45pm. But the strong gains from many of the financials kept me confident, and proved to keep Wall Street confident, as the Dow finished the day off less then 1%.

Despite a lowsy day for tech, INTC beat earnings estimates after market, and is trading up 6% in after hours trading. Genentech (ticker DNA) also reported better then expected 3Q results, and is trading up 4.1% after hours.

Big earnings announcements from JP Morgan, Wells Fargo, and Coca Cola tomorrow before the open. Obviously results from JP and Wells will be negative, but will they beat estimates, and how will Wall Street react to their negative 3Q? I think the reaction will be a positive one for a couple of reasons: 1) Wells recent acquisition of Wachovia was a huge positive not only for the sector, but for the credit markets as a whole, 2) JP has been one of the most fundamentally sound financial institutions since the credit crisis began, and I don't expect this fact to change with Jamie Dimon at the helm. As for Coca Cola, they have traded down every day this month, but a scan of the October option contract volume doesn't favor either side, so they're a tougher call to make, but I see no reason why they would beat estimates, and since I don't like to go against a trend, I'm betting they will drop again tomorrow.

As for Wednesday's market prediction, I think a strong performance from financials today mixed with strong 3Q numbers from INTC (tech) and DNA (pharma) will lead to a positive open. However, I expect weak results from the 10am annoucement of Retail Sales and Empire Manufacturing numbers, and I expect this to drag the market down for the remainder of the day, finishing down 2.5%.