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Macro View

With nothing major on the domestic economic calendar, headlines about Greece’s as-yet unsuccessful negotiations with its bondholders to restructure its private debt may get some traction. But today’s market action will be mostly about the slew of mixed earnings reports from a "who’s who" of corporate America. We also have President Obama’s State of the Union address later this evening.
 
We have 5 Dow components reporting results this morning, of which three came out with positive surprises, while two came up short. Johnson & Johnson (JNJ - Analyst Report) came out with a positive EPS surprise on in-line revenue numbers. McDonald’s (MCD - Analyst Report) beat earnings expectations on roughly in-line revenue numbers. DuPont (DD - Analyst Report) came out with a modest earnings surprise, though the chemicals giant’s top-line came short of expectations.

The company had lowered expectations last month, citing inventory destocking weighing on volumes. With the current Zacks Consensus EPS estimate for 2012 of $4.23 close to the lower end of the company’s guided range, this morning’s reiteration of that guidance is a net positive, in my view.
 
The Dow components missing this morning were Verizon (VZ - Analyst Report) and Travelers (TRV - Analyst Report). Verizon’s miss by a penny reflected high expenses due to increased iPhone sales, though the company’s subscriber additions during the quarter came in at the high end of consensus expectations. Travelers missed, but provided a positive outlook for its business-insurance operation, its largest segment.
 
In other earnings reports this morning, Coach (COH - Analyst Report), the high-end handbag maker, came out with a positive earnings and revenue surprise. Harley-Davidson (HOG - Analyst Report) also reported a modest EPS and revenue beat. We have Apple (AAPL - Analyst Report) and Yahoo (YHOO - Analyst Report) reporting after the close today.
 
The overall mixed picture emerging from this morning’s reports from blue chip companies will likely give stocks a pause. The Greece headlines just add to that negative sentiment.

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