We are in a seasonally quiet period in the market, with stocks
barely moving and volumes remaining on the light side. We saw that
trend play out on Monday and today's session will likely be no
different, with the housing and consumer confidence data on tap for
release a little later unlikely to move the needle much. Stocks are
expected to remain in this holding pattern near all-time highs for
the next few days till next week's top-tier jobs and ISM data.
Attention will shift to the Q2 earnings season beyond next week.
With respect to earnings, we don't have a good enough picture of
the 2014 Q2 reporting cycle despite having seen results from about
10 S&P 500 members, including industry leaders like
). It has been a mixed picture thus far, but estimates for the
quarter followed the by-now familiar pattern of coming down as the
period unfolded, with current consensus estimate of +3% growth in
total earnings for the S&P 500 down from +5.5% in late March.
The lowered estimates notwithstanding, earnings growth in Q2 will
be more than double the pace we saw in Q1.
The expectation is for the growth pace to pick up materially in the
following quarters, with total earnings growth in the second half
of 2014 accelerating to +8.5% and into double-digits in 2015. If
these expectations have to hold, we will need to get some signs of
a stabilizing if not improving outlook from management teams on the
Q2 earnings calls. The favorable guidance from
) recently has raised hopes that we will see some improvement on
the guidance front this time around. But it's too soon to tells
whether Intel is an outlier or a sign of things to look forward to
this coming earnings season.
In corporate news,
) came out with weaker than expected May quarter results (part of
our Q2 tally), while
) beat expectations after the close on Monday. In other news,
) will be in the spotlight following positive results for the
company's cystic fibrosis drug.
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