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The market will likely bask some more in the after-glow of Friday’s positive job report as it has nothing else to latch onto given the almost empty economic calendar and the winding down of second quarter earnings season. There is some optimism on the European front as well, with initial disappointment over Mario Draghi’s plan from last week giving way to hopes that something may be afoot after all.

That said, we have reached the dog days of summer when news flow and trading volumes get thinner. Maybe we should all just focus on the Olympics for the next few days instead of the market. But with Michael Phelps and Usain Bolt already done with their events and the LeBron James squad magnitudes better than their competitors, the rest of the London spectacle may not be that engaging either.

Notwithstanding continued German opposition to bond purchases from the ECB, the market appears to be seeing some glimmers of hope in the Draghi plan after all. This reassessment follows reaction from the Spanish government that seemed to indicate that it may be not be averse to jump through the hoops in order to enable the ECB to purchase its bonds. The modest downtrend in Spanish bond yields is a reflection of this hope.

We are entering the final phase of the second-quarter earnings season this week, with results from 410 of the S&P 500 companies (or roughly 82% of the total) already known. We will be closer to the finish line by the end of this week as we will have results from 91% of the companies by then.

Total earnings are up 5.1% from the same period last year, primarily due to easy comparisons for the large banks. This compares to 8.3% growth for these same companies in the first quarter, when banks didn’t have such easy comparisons. Excluding Finance, total earnings growth falls into negative territory, down 1.3% from the same period last year, compared to positive 6.5% growth for the ex-Finance group in the first quarter.

The most notable aspect of this reporting season has been the top-line weakness, with only 38% of the companies coming out with positive revenue surprises. Even a number of these companies with positive surprises for the second quarter have guided towards softer revenue numbers in the coming quarters.

Other notable features of this reporting season were change of leadership from Tech to Finance, negative comparisons in the Energy sector and the weaker-than-expected results in Basic Materials as high profile misses from Dow Chemicals (DOW - Analyst Report) and International Paper (IP - Analyst Report) show. The drought and its impact on grain prices is starting to show up in results as well, as this morning’s Tyson Foods (TSN - Analyst Report) report shows.

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