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Market News Fails to Disappoint - Analyst Blog
1/29/2013 9:58:00 AM
As the first FOMC meeting of 2013 gets underway today, it is
perhaps appropriate to acknowledge the Fed's contribution to
pushing stocks to within striking distance of new all-time
highs. The Fed is not the sole source of the all -around
optimism in the market; there is, after all, a positive turn in
economic data lately, earnings season has turned out to be decent
enough and Europe has become less worrisome.
??????We don't have the Bernanke press conference this time around and wouldn't be getting updated estimates from the FOMC members either. The post-meeting statement coming out Wednesday afternoon is not expected to show any changes, though minutes of the last meeting had raised fears that the easy-money policy may be ending sooner than the announced timeline. The Fed aside, we will get the November Case-Shiller Home Price index and the Conference Board's Consumer Confidence data a little later.??????
On the earnings front, investors have been finding enough
reassuring data to sustain the positive stock market momentum. A
big part of the earnings outperformance is due to lowered
expectations that made it easier for companies to come out ahead.
We see this in this morning's batch of earnings releases, with
better-than-expected results from
), though the Pfizer's guidance was on the weak side and generic
competition to Eli Lilly's flagship drugs seem to be heating up.
We have positive earnings surprises from 64.5% of the 172
S&P 500 companies that have reported results as of this
morning, with total earnings for these 172 companies up +1.1%
from the same period last year. Please note that these 172
companies account for 47.5% of the S&P 500's total market
But to say that the market has solely become satisfied due to the ratio and magnitude of these beats would be unfair. Company guidance has been favorable as well, particularly relative to what we heard from management teams in the third quarter.
Companies are not raising guidance, but neither are they lowering them, by and large. And that helps investors gain confidence in estimates for 2013, over which many of us had been raising doubts for quite some time.??????
The overall positive tone in the market, however, shouldn't
hide the fact that earnings growth has effectively flatlined. The
composite earnings growth rate -- combining the results of the
172 that have come out with the 328 still to come -- is for only
+0.8% growth. The final growth tally for Q4 will most likely come
in at around +2%. This would mean that total earnings were up
about +3% in 2012.
AMAZON.COM INC (AMZN): Free Stock Analysis Report
D R HORTON INC (DHI): Free Stock Analysis Report
FORD MOTOR CO (F): Free Stock Analysis Report
LILLY ELI & CO (LLY): Free Stock Analysis Report
PFIZER INC (PFE): Free Stock Analysis Report
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