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  • MARKETS MAKE A PAUSE By WSS Research Team 0 comments
    May 10, 2013 1:56 PM | about stocks: NVDA, GPS

    By Carlos Guillen

    Equity markets are trading a bit lower during today's trading session on very little news other than Federal Reserve Chairman Ben Bernanke providing details of managing risks in financial markets and some good financial figures from the likes of Nvidia (NASDAQ:NVDA) Corp and The Gap (NYSE:GPS).

    After a strong performance this week, the Dow Jones Industrial Average appears to be making a pause today, but investors are still enthused by the slowly improving economy and jobs backdrop. As such, there is increasing confidence that during the rest of this year the economy will accelerate. Of course, markets never move higher on a straight line, but the backdrop is certainly supporting a random walk higher.

    During his speech earlier today, Ben Bernanke gave details on how the Fed is keeping an eye on, and trying to control, financial risks. Bernanke said the U.S. central bank is keeping a close eye on the potential risks that come with interest rates being so low.

    Shares of Nvidia Corp. are currently trading over four percent after the company reported better than expected earnings and revenue. The company reported earnings per share of $0.13, three cents above the Street's consensus, and revenue of $954.7 million vs. the $940.4 million consensus. On the down side, the company guided second quarter revenue in the range of $955.6-994.5 million vs. the $1 billion consensus.

    Shares of clothing retailer Gap Inc are up over five and a half percent after reporting stronger than expected same store sales and after guiding better than expected first quarter earnings. The company said same store sales rose 7 percent vs. 5.6 percent consensus. Moreover, the Gap said earnings would land in the range of $0.64-0.65 vs. the Street's $0.56 estimate.

    At the moment the Dow is in the red, but only by three points, virtually trading flat from yesterday's closing price. Next week promises to be a more eventful week with a number of economic data points such as retail sales, Empire State manufacturing, building permits, and University of Michigan Sentiment being displayed.

    Fretting over the Fed
    By David Urani

    Beginning yesterday, there's been a bit of speculation swirling the markets that the Fed could start to wind down its QE money printing program. It was started by rumors, perhaps baseless ones, that the WSJ had an inside scoop and would soon report on it. Whether true or not you have to consider that the economy has been looking okay recently, and if the economy were to continue growing the Fed would indeed act to wind down QE at some point, whether it be sooner or later. Whatever the case, it's been enough for traders to take action and lift the dollar index (weighed against a basket of currencies) up more than 1.5% over the last two sessions.

    Naturally, gold has taken a resulting hit; it's down 2.3% today. It's also exacerbating the drop in oil today which is down 2%, helped by an OPEC report in which they kept their consumption forecast flat while also warning that they see downside risk.

    Perhaps most interestingly there has been a resulting yen trade as well, as the dollar passed the 100 yen mark. Consequentially traders acted on that psychological barrier and sank the yen roughly 3% over the past two sessions. Likewise, Japan's Nikkei index made a nice cheap-yen rally. That extended the Nikkei's 7-day winning streak so far this month, over which it's up approximately 6%.

    (click to enlarge)

    Bernanke actually took the stage today to talk about monetary policy and did not really hint that they were about to wind down QE. That being said, he played his usual poker face as he's so good at and also didn't really suggest the Fed would continue going at full speed, either. In the end, he didn't stop traders from worrying that QE's time is limited.


    Stocks: NVDA, GPS
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