US stock futures are set for a lower open this morning after foreign markets were weak overnight. Solid bank earnings this morning from JP Morgan (JPM) and particularly Goldman Sachs (GS) this morning are helping to pare pre-market losses. Yesterday the market opened lower but was able to claw back into positive territory. Let's see if the market can remain resilient today.
Yesterday the big news was Facebook's (FB) surprise event, which turned out to be the unveiling of something they are calling "Graph Search." It is a new take on search that searches out information and opinions from your Facebook friend network rather than on the entire Internet. The idea is that you will get results that are more personally relevant to you, things like restaurant recommendations from friends or potential single men/women in your area that are friends of friends. After such a big run for FB the news was not enough to trigger another extension and the stock finished the day 2.7% lower. Let's see how it acts today.
Google (GOOG) initially rallied when it became apparent Facebook would not be launching a traditional search engine. However, the GOOG rally was stopped in its track later in the event when Facebook announced a partnership with Microsoft (MSFT) that that would see FB Graph Search results default to the company's Bing search engine.
Microsoft was a winner on the day after that news broke. The stock gained more than 1%, and this could be a catalyst to push it out of a lower base. The company's ventures into mobile and tablet hardware have been largely unsuccessful, but they have a ton of cash on hand and pay a solid dividend, making it a somewhat valuable proposition to value investors. Let's see if MSFT can build on yesterday's strength.
A stock like Yelp! (YELP) tanked on the FB news as Graph Search could threaten Yelp's business. However, in some ways the Facebook venture serves to validate Yelp's value, and yesterday's sell-off may have been over done. Traders will be watching to see if YELP drops further or whether money steps in on this dip.
Bank earnings will continue through the week as tomorrow we have Bank of America (BAC) and Citigroup (NYSE:C) report tomorrow before the open. Both stocks have seen strong moves over the last few months, and like we have seen with the others it could take a very impressive report to catalyze another rally.
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*DISCLOSURES: Scott Redler is long GE, DANG, MSFT, CAT, ZNGA, BAC, TBT, INTC, DELL, TBT, VMW, F, GLD. Short FB, SPY, HPQ.