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Mixed Earnings Results brings on Risk Aversion

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Mixed Earnings Results brings on Risk Aversion

Stocks in the US started off on a soft note Wednesday after hitting a new all-time high on the S&P 500 index on Tuesday. Chinese loan demand has pushed banks into a situation where loan growth tripled, creating a potential bubble. Earnings were mixed, as Boeing reported better than expected earnings while Caterpillar reported a miss.

On Tuesday the Department of Labor reported a delayed non-farm payroll report which shows that jobs grew at 148K compared to the 180K expected by economists. The soft labor report will allow the Federal Reserve to keep asset purchases at 85 billion per month and push back any potential tapering to mid-2014.

Risk aversion was ignited on Wednesday by press reports that China’s biggest banks tripled the amount of bad loans written off in the first half of the year. Additionally and article in the China Securities Journal reported new property curbs may be coming in the fourth quarter of 2013.

Caterpillar (NYSE:CAT) was a drag on the broader indexes as the company reported Q3 sales of $13.42 billion, down from $16.44 billion in the year ago quarter. Earnings were $1.45, down from $2.54 per share last year. The analyst consensus estimates for sales of $14.45 billion and earnings of $1.68 per share.

The company has revised its 2013 outlook and now expects sales and revenues to be about $55 billion, with profit per share of about $5.50. The previous outlook for 2013 sales and revenues was a range of $56 to $58 billion with profit per share of about $6.50 at the middle of that range.

Boeing (NYSE:BA) on the other hand saw positive price action after the company said third quarter EPS increased 16% to $1.80, easily topping forecasts for $1.53. GAAP EPS rose 12% to $1.51 from $1.35 in the same period last year. Third quarter revenue was $22.1 billion, beating forecasts for $21.6 billion.

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