Tuesday, October 16, 2012
With inflation not much of a concern for investors or the Fed, this
morning's CPI reading is essentially a non-event. Favorable
Industrial Production and homebuilder sentiment index readings
coming out a little later may get some traction in today's trading
action. But the real backdrop for today's market is the real start
of the third quarter earnings season, with 35 companies reporting
results today including 16 S&P 500 members.
We will have a better feel for the Tech space outlook after results
from
Intel
(
INTC
) and
IBM
(
IBM
) after the close today, but the overall tone of earnings reports
this morning is on the positive side. We got solid earnings and
revenue beats from
Goldman Sachs
(
GS
) and
Johnson & Johnson
(JNJ
), with Goldman also raising its dividend.
Coke
(
KO
) came in-line with expectations, with case volume weakness in the
Asia-Pacific region (particularly China) and negative currency
effects offsetting volume gains elsewhere. UnitedHealth (UNH) beat
on improved margins, offsetting top-line weakness, in a
potentially positive sign for the healthcare group as a whole.
Zacks ESP or 'Earnings Surprise Prediction', our proprietary
leading indicator of positive earnings surprise, had correctly
predicted the positive earnings surprises from Goldman this morning
and
Gannett
(
GCI
) on Monday. For the Intel and
CSX
(
CSX
) reports coming out
after the close today, the Zacks ESP is indicating negative
surprises.
We will know more about this morning's reports after managements
discussion of the business outlook on the earnings calls. And if
managements guidance is as reassuring as these results, then the
earnings picture may not be that dire. But it's too early to draw
any firm conclusions about this earnings season from the admittedly
small sample of results we have seen thus far. At stake are
estimates for the fourth quarter and beyond, which seem to be
unusually high at this stage. We will soon find out one way or the
other.
Sheraz Mian
Director of Research
CSX CORP (CSX): Free Stock Analysis Report
GANNETT INC (GCI): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
INTL BUS MACH (IBM): Free Stock Analysis Report
INTEL CORP (INTC): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis
Report
COCA COLA CO (KO): Free Stock Analysis Report
UNITEDHEALTH GP (UNH): Free Stock Analysis
Report
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