Back to top

Economic Highlights

May 7: Markets Face Period Devoid of News

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

How do you interpret news stories that cite interest rate cut by Australia’s central bank as the reason for stocks to open higher today? It tells you that there is no real news, forcing media people to come up with something that makes some sense. And rate cut announcements, even by far-off countries that have little relevance to dynamics in the U.S. economy, make for a plausible enough explanation for positive start for U.S. stocks.

The reality is that we are passing through a relatively quiet news period this week. There is still some activity on the earnings front as this week is effectively the last major reporting week of the Q1 earnings season. But not much will happen on the economic calendar till the following week when the April Retail Sales numbers come out May 13th. We will also get Industrial Production, housing, and inflation data next week.

Last Friday’s non-farm payroll report has raised hopes that fears of a Spring Swoon may have been premature. We have to keep in mind though that the jobs data runs counter to what we have been seeing lately from all other economic indicators. Next week’s Retail Sales numbers will give us a better idea of whether the tax hikes and spending cuts are having any bearing on consumption trends. But as far as the stock market is concerned, all it cares about is the Fed. As long as the Fed remains on its easy-money track, investors will be more than willing to stomach soft economic reports. We saw this play out multiple times in recent weeks when stocks sustained their uptrend even in the face of weak economic data.

The Q1 earnings season is winding down. Including this morning’s reports from EOG Resources (EOG), Fossil (FOSL) and others, we now have Q1 earnings reports from 423 S&P 500 companies that combined account for 87.9% of the index’s total market capitalization. Disney (DIS), Whole Foods (WFM) and Electronic Arts (EA) will report after the close today.

Total earnings for these 423 companies are up +3.7% from the same period last year, with 66.4% beating earnings expectations. Revenues are down -0.8%, with only 41.1% of the companies coming ahead of top-line expectations. The composite growth rate for Q1, where we combine the results of the 423 companies that have reported results with the 77 still to come, is for +2.4% growth in earnings on -0.7% lower revenues. This earnings growth rate compares to the modest decline expected at the start of the reporting season.

Consensus expectations for the coming quarters have started coming down, with total earnings in 2013 Q2 now expected to be up +1.6% on -0.5% lower revenues. This is a drop from the +3.9% total earnings growth expected in Q2 on +0.5% higher revenues less than four weeks ago. Expectations for the back half of the year still remain elevated, though they have started coming down modestly. For full-year 2013, total earnings are now expected to be up +6.1%, down from the +6.8% growth pace expected a few weeks back.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
BITAUTO HOLD BITA 35.33 +14.82%
ANI PHARMACE ANIP 24.79 +14.66%
E HOUSECHINA EJ 10.99 +9.24%
CANADIAN SOL CSIQ 26.97 +7.15%
INTERNATIONA ICAGY 33.30 +5.38%