December's bull talk that 2011 would be great for investors is running out of steam a few weeks into January. So far, earnings results are mostly falling short of the sell-side hype. J.P. Morgan's Tom Lee, the equity strategist, told clients Friday that earnings-per-share reports that beat estimates are coming in at 68%, below the past four-quarter average of 74%.
These are the early days of earnings season, but it is hard to ignore what is happening in the financial sector. That would be the sector that, just a few weeks ago, investment-bank bulls said was poised to carry the stock market higher, due to improving consumer spending, fewer credit defaults and all sorts of other data that analysts monitor.
Yet Citigroup (ticker: C) reported crummy results. Everyone in the options market was betting that the stinky stock's earnings would push it permanently past $5. Instead the earnings data dunked the stock below that mark, making it untouchable to many major investors whose investment charters prohibit them from owning stocks below $5. (more)
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