Is the so-called “Bernanke Put” really coming out of the market already? QE3 is still just beginning. And earnings season is now living up to the fears that many of us had even as the market rallying on hope up until early this month. The chatter is growing that Ben Bernanke will not seek another appointment as the Chairman of the Federal Reserve. Does this mean that the easy money will come to an end immediately? It seems unlikely. The real problem for the broader market is that earnings season is bringing more and more bad news from the major companies in America.

24/7 Wall St. wanted to give an earnings season report card. The good news is that if this was a school grade it would not get an “F” for failing. The bad news is that it is a “D” for sure, and that “D” may really only be because of a bell-curve grade. The DJIA appears to have peaked in 2012 as you will see here. With a 200 point drop on Tuesday, the 13,125 level is now down over 500 points from the DJIA’s peak earlier this month. We have given a blow-by-blow of the earnings and carnage for this earnings season.

DuPont (NYSE: DD) and its lower earnings being met with layoffs is the most recent carnage. What happens when the great chemicals and ag company is doing so poorly that it has to announce layoffs? Well, shares are down over 8% at $45.50 against a 52-week range of $43.06 to $53.98. Another issue that is damning the market today is the earnings report from conglomerate 3M Co. (NYSE: MMM). With the DJIA being a price weighted index, 3M is acting as a big drag. Earnings were $1.65 per share on revenues of $7.53 billion, versus $1.52 per share on revenues of $7.53 billion a year ago and versus the Thomson Reuters consensus estimates for EPS of $1.65 and $7.63 billion in sales. 3M shares are down 3.5% at $89.30 against a 52-week range of $75.49 to $95.46.

Even General Electric Company (NYSE: GE) has been unable to avoid the earnings trap as the earnings pressure took out almost 4% on Friday, but a sell-off of almost 1.5% on Monday has been followed by a sell-off of 2% more on Tuesday. GE shares are now at $21.28 and a 10% correction from its recent multi-year high would be $20.86. Apparently its digital market efforts are not really hiding the ongoing challenges.

The fall from grace by the prior market darling Google Inc. (NASDAQ: GOOG) caused a real issue for investors. It was not just that its earnings report was sub-par at best. The way that Google “accidentally” released the data during the middle of the day caused a market fiasco and broad sell-off. Investors had been betting that Google was going to be a bright spot as its shares had recently hit an all-time high. Now Google shares are trying to find their footing but the 0.8% gain on Tuesday still has shares down at $684.00 against a 52-week range of $556.52 to $774.38.

And what good did Barron’s do over the weekend with its incredibly late story with no new insight called “Bye-Bye, PCs” that outlined the death of the PC market ahead? This talked about how both Dell Inc. (NASDAQ: DELL) and Hewlett-Packard Co. (NYSE: HPQ) will fade from view. Really? That trend has been steady and ongoing here for years. This is in part because of the rise of Apple Inc. (NASDAQ: AAPL) as the world’s most valuable company. But the first real killer on top of the recession was the rise of low-cost computing from netbooks and other cheap computers that were deemed to be good enough computing by cash-strapped consumers. Throw in the rise of smartphones like the iPhone and Android phones, then throw in the rise of the iPad and other tablets. Dell and H-P are again challenging multi-year lows. Intel Corporation (NASDAQ: INTC) turned in lower guidance yet again with its earnings report last week before Barron’s damned the PC ecosphere and its shares slid to $21.79 from $22.35 after the report. Shares have tried to stabilize, but shares are only about $21.40 as of now and that is also within 1% of a 52-week low.

And what about metals and mining? This HAS to be good if the economy is getting better. Unfortunately, that is not what Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) reported on Monday. Tuesday’s drop of over 4% follows Monday’s drop on the report of about 1.5%. Now shares are down at $38.85 against a 52-week range of $31.08 to $48.96. And what about major equipment sales from the likes of Caterpillar Inc. (NYSE: CAT). The equipment giant’s shares have held up actually rather well with a record third quarter considering that it lowered guidance and said visibility is limited. Shares are now down 2% more to $83.18 against a 52-week range of $$78.25 to $116.95. The only reason that Cat’s shares have held up this week is because they are already down so much from their highs.

And what about McDonald’s Corp. (NYSE: MCD) having crummy earnings? This was the best performing stock in the DJIA in 2011, but that was then. Without its star CEO, now McDonald’s franchisees are said to be facing a couple of dull years ahead with troubling same-store sales data of late. Shares were close to $93 before earnings, but now shares are under $88 as no one wants a Big Mac. McDonald’s is now just one more really bad market day from hitting a 52-week low as its range has been $85.92 to $102.22. And the former Mickey-D’s spin out of Chipotle Mexican Grill, Inc. (NYSE: CMG) was so bad that we equated it to a bad case of Montezuma’s Revenge. Chipotle had been a high-flyer but its shares also hit a 52-week low after earnings.

And oil service giants are following oil prices lower. The earnings reports from Schlumberger Ltd. (NYSE: SLB) and Baker Hughes Inc. (NYSE: BHI) last Friday were dismal. Baker Hughes is now down 10% in just a few days and Schlumberger is now down over 10% from its 52-week high. Paul Ausick outlined the troubles for us and showed that neither company wants to give guidance now.

JPMorgan Chase & Co. (NYSE: JPM) initially responded well to its earnings, but the environment is hard for banks to count on easy-money earnings now. No one cares that this bank is at a huge discount to its book value because for troubled banks book value now just represents a ceiling rather than a floor. A 2% drop on Tuesday has the House of Morgan trading lower than before its earnings report. At $41.14, the 52-week range is $28.28 to $46.49.

International Business Machines Corporation (NYSE: IBM) is now a fallen from grace DJIA component. Earnings were seen as a serious disappointment even though its backlog was up 1% to $136 billion. With this being the highest priced DJIA component, its fall has done serious damage to the DJIA as evidenced here: Shares closed up 1% at $211.00 against a 52-week high of $211.79 on the day of the earnings report. Then shares fell almost 5% after the report and shares have fallen almost every day since. After another 1.5% drop on Tuesday, IBM is now down to $191.25. If IBM hits $190.61, its shares will then be 10% off of the high.

Last Friday was the twenty-fifth anniversary of the 1987 market crash. We highlighted just how different the DJIA components are with not even half of the 30 DJIA companies the same as back in 1987. We also showed how each has performed. At the start of this article we noted how the DJIA has likely peaked in 2012. No one ever knows if that is really the case and the election outcome may have a significant impact on this. Still, we gave the methodology on the first trading day of January that the DJIA would peak at 13,678 this year. The high for 2012 was seen at 13,661.87 as recently as October 5.

JON C. OGG

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