Good Earnings? Sell, Sell, Sell!

Only Wall Street can be disappointed in a company that nearly doubles its third quarter earnings. Wall Street was looking for Alcoa to come in with earnings at 77 cents per share but Alcoa came in at 61 cents per share. Alcoa warned the street earlier that there was weaker demand from housing and automotive sectors and that aluminum prices would come down. They still managed to nearly double their earnings from last year. This begs one to ask the question, Did Wall Street effectively take this into account? Was Alcoa’s guidance effectively priced into the stock or is this another case of the institutional guys selling on news? Some say that Alcoa’s news will set the tone for the markets for the day, and indeed the futures were lower this morning. I, for one, don’t think the entire market will move according to the fortunes of one stock.

The other major company out with earnings was Genentech. Genentech beat the street by two cents yet shares still fell in yesterday’s after hours session. What gives? These guys actually beat the street. Well it looks like sales of some of its cancer drugs seemed to be tapering off, so that sent Wall Street running. Perhaps this is another case of selling on the news?

I expect to see more rhetoric coming out of North Korea. Whether it is enough to affect the markets is anyone’s guess. But when you have a country like North Korea and a group of leaders with enough collective brain power to dimly light a 40 watt light bulb anything can happen.

Today may shape up to be an interesting day.