July 19: Earnings Take the Spotlight – Economic Highlights

With the second quarter reporting season getting into high gear, we get a torrent of earnings reports today, with a focus on banks. Bank results are benefiting from improving credit quality, though top-line gains still remain a challenge. The overall positive tone of this morning’s earnings reports should help the market shake off some of the negativity from Monday’s sell off. The better than expected June Housing Starts and Permits numbers this morning should also sentiment.

Bank of America (BAC) reported results that were inline with its pre-announced multi-billion mortgage settlement. The inline results aside, the banking giant will remain under the spotlight to additional litigation exposure, questions about capital adequacy, and the dividend issue. Goldman Sachs (GS) came short of expectations on both EPS and revenue as soft trading volumes weighed on results. Wells Fargo (WFC) modestly beat on EPS, but its revenue numbes were a shade lighter. Bank of New York Mellon (BK) and State Street (STT), two major custodian banks, also came ahead of expectations.

Among non-banking bellwethers, Coca Cola (KO) beat EPS and revenue expectations this morning as did Johnson & Johnson (JNJ). IBM came out with better than expected results after the close on Monday and guided higher. Wynn Resorts (WYNN) and Steel Dynamics (STLD) also came ahead of expectations on Monday. Two major technology heavyweights, Apple (AAPL) and Yahoo (YHOO), report after the close today.