EmailThe equity market is feeling better today after feeling bad yesterday in the wake of feeling good on Friday on the heels of feeling bad last Thursday.
If you catch our drift here, there hasn't been any continuity to the market of late unless, of course, one is willing to consider choppiness a form of continuity.
Today's booster shot for the market is as it should be: good earnings news.
It is also helping that headlines out of Europe have a hopeful tint to them (for today anyway). Spain held a relatively successful bill auction and policymakers are reportedly working toward an agreeable bailout package for Greece. However, there is still no agreement on a debt limit deal in the U.S., which is the elephant in the room.
Trying not to be distracted by that elephant, market participants have turned their attention for the time being to a growing list of better-than-expected earnings results, led by blue-chip multinational companies like IBM (IBM), Coca-Cola (KO), Johnson & Johnson (JNJ), and Harley-Davidson (HOG).
Bank of America (BAC), Wynn Resorts (WYNN), Wells Fargo (WFC), UnitedHealth (UNH), KeyCorp (KEY), and W.W. Grainger (GWW) are other notable companies that exceeded the Capital IQ consensus earnings estimate for the June quarter.
The black sheep on the earnings calendar today is none other than Goldman Sachs (GS), which missed the lowered Capital IQ consensus earnings estimate by $0.56. Shares of GS are indicated to open 3.0% lower and will act as a drag on the financial sector.
Goldman's disappointing report isn't having much market-moving impact, though, since it has been presumed for some time that the investment bank was likely to put up some very un-Goldman like numbers. That thought has been worked into the stock price, which is down 23% year-to-date.
Separately, the good vibes this morning have also been driven by housing data of all things.
Housing starts surged 14.6% in June to a seasonally-adjusted annual rate of 629,000. That was well above the Briefing.com consensus estimate of 570,000 and the highest level since January.
Building permits, meanwhile, increased 2.5% to a seasonally adjusted annual rate of 624,000. That, too, exceeded the Briefing.com consensus estimate, which was pegged at 609,000, and it should be a likely driver of any upside surprise in the Leading Indicators report for June that is due to be released on Thursday.
The S&P futures are currently 0.6% above fair value.
If the current indication holds, the S&P 500 should retest the 1313 level soon after the start of trading. That is the same level it closed at last Tuesday when the market was feeling bad before it felt better on Wednesday leading up to not feeling good on Thursday.
How's that for continuity?
--Patrick J. O'Hare, Briefing.com
Patrick J. O'Hare is the Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial please email researchsales@briefing.com.
