Stocks appear on track to start today's session in the green,
maintaining the overnight action out of global markets. We don't
have much on the economic calendar today, but we will get two days
of Fed Chair Janet Yellen testimony and a couple of key economic
readings this week. Importantly, the Q2 earnings season really gets
underway this week, with 60 S&P 500 members reporting
The market seems very happy with the
) report this morning - the numbers look particularly impressive
once the $7 billion settlement with the Justice Department also
announced today are excluded. The Citi report follows the positive
earnings announcement from
) on Friday and precedes results from
Bank of America
) and all the major regional players this week.
No major fireworks are expected from the sector, with total
Finance sector earnings in Q2 expected to be down from the same
period last year. Banks aren't expected to report incremental
improvement in margins or loans to offset the persistent weakness
on the trading side and the roll-off of the mortgage refi
Citi's investment banking results came in on the strong side,
with trading revenues down less than what management had guided.
This provides a positive read-through for J.P. Morgan and
Beyond the Finance sector, overall earnings growth expected in
Q2 of a little over 3% is an improvement over what we got in the
preceding quarter. But that's not really saying much given how weak
Q1 was. Estimates fell as the quarter unfolded, a trend that we has
been in place for almost two years now.
But the magnitude of negative revisions in Q2 was on the lower
side relative to other recent quarters, likely indicating the
analyst community's improving growth outlook which also shows up in
the elevated expectation for the second half of the year. It will
be interesting to see how estimates for Q3 evolve as management
teams share their business outlook with the market.
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