Wednesday, April 25, 2012
All eyes will be on Ben Bernanke who holds a press conference
this afternoon following the two-day FOMC meeting. But investors
have plenty of news this morning to keep them occupied - from
strong earnings reports from a host of blue chip companies,
including
Apple
(
AAPL
), to a downbeat March Durable Goods reading for March. My sense is
that investors will read the Durable Goods miss as improving the
odds of further Fed support and not let this disappointment come in
the way of the earnings centric positive day, at least though
this afternoon when Bernanke starts speaking.
That said, the Durable Goods miss is disappointing and will
likely feed the narrative of a loss of momentum in the economy. The
report was expected to show a decline from the February level, but
the 4.2% drop on a 'headline' basis was significantly weaker than
expected. This compared to a gain of 1.9% in February, which was
revised down from 2.2% originally reported. 'Core' Durable Goods
Orders, officially called nondefense capital goods orders
ex-aircraft, were also much weaker than expected at down 0.8%
after February's 2.8% gain.
This reading raises questions about the health of business spending
outlook going forward and will likely be perceived as another sign
of loss of momentum in the economy. It will be interesting to see
how Ben Bernanke interprets the recent softer run of economic data
in this afternoon's press event. But investors expect him to
provide enough reassurance on fresh Fed support to keep sentiment
high. Disappointment on that count, whether real or perceived, will
not go down well.
Of this morning's major earnings releases, we got positive
surprises from
Boeing
(
BA
),
Eli Lilly
(
LLY
),
Caterpillar
(
CAT
), and
Sprint
(
S
). Caterpillar's raised guidance following the earnings beat on
modestly lower than expected revenue is particularly reassuring
given the company's substantial emerging market leverage.
Apple
produced another impressive earnings result after the close
on Tuesday.
Sheraz Mian
Director of Research
APPLE INC (
AAPL
): Free Stock Analysis Report
BOEING CO (
BA
): Free Stock Analysis Report
CATERPILLAR INC (
CAT
): Free Stock Analysis Report
LILLY ELI & CO (
LLY
): Free Stock Analysis Report
SPRINT NEXTEL (
S
): Free Stock Analysis Report
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