Earnings Preview GE, KO, MSFT, INTC, BAC, JNJ, C, GS
GE, KO, MSFT, INTC, BAC, JNJ, C, GS
The S&P 500 and DJIA erased losses for the week, finishing higher by 0.2%, and about 0.1% respectively. The NAS composite fell 1% for the week.
With several companies reporting results this week, investors believe that the bad, bad news has been factored in.
Data showing slower growth in Europe, China and the United States has weighed on the equities markets recently, US companies have warned about overseas weakness and a stronger USD hurting profits on exports.
The minutes from the US Federal Reserve’s June meeting suggested it is not quite ready to inject more monetary stimulus into the economy, traders focused on US Federal Reserve Chairman Ben Bernanke’s words for the signal of such a possibility and how he views the slowing US economy.
Next week dozens of Standard & Poor’s 500 companies are to report. They run from top technology names, including Intel (NASDAQ:INTC) and Microsoft (NASDAQ:MSFT) to General Electric (NYSE:GE) and Coca-Cola Co (NYSE:KO).
Earnings estimates have fallen, and S&P 500 earnings for Q-2 now are expected to rise 5% from a year ago, down from an estimate of 9.2% at the beginning of April.
Virtually all sectors have seen estimates fall due in part to weak demand in Europe. Energy and utilities are expected to be the weakest performers this Quarter after big declines in energy prices in Q-2.
The fall in estimates could be enough that the majority of companies end up beating expectations, as they typically do, sparking a rally, the beginning of which may have been seen on Friday.
That could bolster the S&P, where trading has narrowed to a range between 1,310 and 1,370 for most of the last 20 sessions.
Bank of America Inc (NYSE:BAC) is expected to report earnings of 0.15/shr Wednesday, but some say they could come in at 0.135/shr, a miss of about 9%.
The technology sector could end up mixed.
Negative to positive earnings guidance for Q-2 is 3.3 to 1, the worst since Y 2008.
Among other S&P companies scheduled to report are Goldman Sachs (NYSE:GS), Citigroup (NYS:C) and Johnson & Johnson (NYSE:JNJ).
The final details of a Spanish bank bailout are expected this week among developments in the 2.5 yr old Eurozone debt crisis.
US Fed Chairman Ben Bernanke is due to deliver his semiannual monetary policy report to the US Senate and House committees Tuesday and Wednesday, analysts said he is not likely to divulge plans of further economic stimulus, but he is know to surprise.
Mr. Bernanke will likely tell Congress to act on fiscal policy and tackle the issues of huge budget deficits and the impact on the economy of approaching sharp cuts in government spending known as “the “fiscal cliff.”
Savvy observers expect him to try to bring the message home to policymakers to address the fiscal cliff. Fiscal tightening flies in the face of any effort to dodge deflation.
Heffernan Capital Management
Business Development Director – Private Client Group,
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408
Fax: +65 6329 9699
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
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