Wednesday, July 25, 2012
We have the usual headlines out of Europe this morning: pointing to
'unsustainable' government bond yields in Spain and Italy, falling
business confidence in Germany and a negative GDP print in the U.K.
But the key driver for today's trading action will likely not be
those European headlines, but the slew of earnings reports from a
handful of bellwethers.
) surprise earnings miss will be a major drag in Tech today, but I
find the resilient results from
) this morning to be far more reassuring.
Apple did cite economic weakness contributing to its miss, but the
consensus takeaway appears to be that consumers are holding out for
the next version of the iPhone which is expected to come out a few
months later. I am somewhat skeptical of this narrative, but have
no basis to outright reject it. Given the tech giant's enormous
weight - it single-handedly brings in about a fifth of the Tech
sector earnings - the 'miss' will have a bearing on aggregate
second-quarter earnings numbers.
Apple aside, the earnings reports this morning Caterpillar and
) are quite favorable. The Caterpillar report is particularly
positive, as they not only handily beat earnings and revenue
expectations, but also provided reassuring commentary about the
The company did lower the high end of their full-year 2012
revenue guidance range (from $68 - $72 billion to $68 - $70
"weaker economic conditions in much of the world and about $1
billion of negative currency impacts,"
but the stock was priced something far more negative.
APPLE INC (AAPL): Free Stock Analysis Report
BOEING CO (BA): Free Stock Analysis Report
CATERPILLAR INC (CAT): Free Stock Analysis
FORD MOTOR CO (F): Free Stock Analysis Report
PEPSICO INC (PEP): Free Stock Analysis Report
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Bottom line, this morning's reports from Caterpillar, along with
Boeing, Ford and Pepsi would qualify as positive earnings releases.
These may not be enough to offset the impact of Apple's miss, but
the damage likely would have been greater without them.
Director of Research