Exxon reported earnings that missed expectations due to cost pressures that hurt their refining margins. I don’t know if their earnings are responsible, but the energy and materials sectors are both under extreme selling pressure today while almost every other sector is extremely strong. In my opinion, their report may not be indicative of the energy complex at large; in spite of record high oil prices for awhile now, Exxon has always seemed to have a few kinks in their earnings armor, as is often the case for the integrated players.
Nevertheless, the action suggests a very large rotation out of what’s worked and into what hasn’t, at least for today. If nothing else, it is a healthy sign to see the market’s breadth improve and for some of the buying pressures in commodities to be relieved.
On the economic front, GDP came in at about .6% yesterday and employment levels, while shaky, haven’t generally reached recessionary levels. All in all, not strong, but not a catastrophe either.
The S&P 500 is currently trading at 1406. If it can maintain this level and close above 1400, it would likely be a bullish sign, as it has been a critical resistance/support level for much of the past year.
