Walking in the door this morning, corporate profit news had a favorable feel and the treasury market was flashing a bid (yields were down). This is a shift from the past week when companies were disappointing investors and interest rates seemed to be screaming higher.
Here is a quick summary of this morning’s events:
Home Depot (HD - Analyst Report) and Best Buy (BBY - Analyst Report) impressed the market with their quarterly results. HD earned $1.24/share against the Zacks Consensus EPS Estimate of $1.19. Q2 same store sales growth was up 11.4% in the U.S., and the company was constructive on H2 2013 on the back of conditions in the housing market. BBY reported EPS of $0.32 against a Zacks Consensus EPS Estimate of $0.12.
Analysts were generally pleased with the results at Urban Outfitters (URBN - Analyst Report) focusing on stronger than expected EPS and downplaying a short fall on revenues to forecast. There have been a handful of positive analyst statements. Bob Evans (BOBE) posted as expected earnings and soft revenues, but lifted its dividend as an offset. The return of capital has been a theme of the bull market.
The main negative in retail seemed to rest in Dicks Sporting (DKS - Analyst Report) which missed analyst estimates on earnings and revenues and provided soft guidance.
Beyond retail, the materials sector did see BHP Billiton (BHP - Analyst Report) post weak results to consensus. The stock had run up sharply into earnings.
Treasuries were bid overnight. There seems to be chatter about real money interest in the Asian session. Of interest, the September 10 year treasury futures contact has been able to hold its July lows. The price strength is a bit surprising given the wave of negativity in the treasury sector.
Even though the news flow is market favorable, the “support” levels on the S&P 500 chart seem strongest at 1635/1632 and 1625.
RTI Question: Do you think today’s “positives” are enough to get the market out of its losing streak and reverse the downtrend or is the news just noise in a correction?