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Macro View

The market will likely get a lift from a number of positive earnings announcements today, even as it waits for the European deal on Wednesday. Stocks did not take a negative view of the inconclusive weekend Euro-zone summit, but it may not be as charitable if faced with another delay.

The market appears to have priced in some sort of a viable European plan and fresh doubts on that front will likely put a stop to the current market rally. Stocks have made impressive gains this month, up almost 14% since October 3, on rising European hopes and the reassuringly strong quarterly earnings reports.

A number of this morning's earnings reports were particularly reassuring. DuPont (DD - Analyst Report) handily beat earnings and revenue expectations and guided higher. UPS (UPS - Analyst Report) came out with a positive earnings surprise on in-line revenue and reiterated its earlier guidance. Xerox (XRX - Analyst Report) also came ahead of earnings and revenue expectations and reiterated its guidance. 3M (MMM - Analyst Report) missed expectations and guided lower on weakness in its electronics business, citing economic factors.

Texas Instruments (TXN - Analyst Report) came short of expectations after the close on Monday, citing economic headwinds, and guided lower. Netflix (NFLX - Analyst Report) shares will be in the spotlight for the wrong reasons as the company provided downbeat guidance even as it came ahead of expectations in its quarterly results.

Contrary to some of the more exaggerated concerns about earnings outlooks, the overall tone of earnings reports in this cycle has been positive. With economy no longer a pressing concern, as will likely be confirmed by this week's GDP report, and reassurance on the earnings front, all we need at this stage is a viable enough plan out of Europe.

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