Traders taking it slow this morning following the break of 10,000 on the Dow Wednesday. Strong earnings reports from Intel (INTC) and JPMorgan (JPM) provided a bullish atmosphere yesterday, as did better than expected economic news. Goldman Sachs (GS) and Citigroup (C) are the latest to report, but their results have not lived up to raised expectations. Even positive economic news has not provided strength for stocks in early trading.

GS shares are down more than two percent despite blowing away earnings estimates. Goldman made $5.25 a share in the third quarter, $1.01 above the expected figure. Revenues fell 10.1 percent year on year, but at $12.37 billion, it easily topped forecasts for $11.02 billion. Traders are selling the stock simply because they had bid the stock up ahead of the actual report. GS shares are trading near $187 Thursday, but were below $160 at the beginning of September.

Citi also reported this morning with the company losing 27-cents a share, 11-cents better than anticipated. However, Citi announced that it had $8 billion in credit losses with securities and banking revenues down 33 percent from the prior year. Citi has not participated in the rally in financials with the stock off this year by more than 25 percent compared with a gain of 50 percent for JPM.

Jobless claims for the week ending Oct. 10 fell to a nine month low at 514,000. The four-week moving average continues to decline, dropping by 9,000 to 531,500. More good news came from the continuing claims data for the week ending Oct. 3, which fell below 6.0 million for the first time since March. The jobs market has been lagging other sectors of the economy during the recovery, leaving traders concerned about consumer spending and sentiment. Jobless claims have fallen in five of the past six weeks and this could lead strength in payrolls in October.

The FOMC minutes on Wednesday showed that the Fed is not currently concerned about inflation. Consumer prices in September did rise 0.2 percent overall and at the core, a tenth above expectations. Year on year, consumer prices are down 1.3 percent overall and up 1.5 percent at the core. In other economic news, the Empire State Mfg. Survey rose much more than expected in October, to a level of 34.57 from 18.88 in September. This marks the highest reading for this index since November 2007.

The fact the Dow went above 10,000 Wednesday has gotten a lot of attention and could have been part of the reason traders jumped in late in the session. However, this level is psychological and we need to remember this level has been broken several times, the first time in 1999 when oil was below $20 a barrel and gold was at $220. Nonetheless, we are getting earnings results and economic reports that are above expectations and this could keep the bears at bay.

Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site