Wednesday, July 20, 2011
With growing optimism about a debt ceiling/budget deal in Washington, the market will likely remain focused on earnings reports. There is so much to like in the earnings reports, particularly outside of the finance sector. And it is not just Apple (AAPL), which gave a new meaning to positive surprise with its results after the close on Tuesday. Many companies in different industries are posting better than expected results.
In an economically sensitive earnings report, railroad operator CSX Corp (CSX) came ahead of EPS and revenue expectations on the back of solid gains in volumes in all key product markets. United Technologies (UTX) beat on EPS and revenue expectations. American Airlines (AMR) not only reported better than expected earnings, but also announced the largest aircraft order in history, split between Boeing and Airbus.
Apple’s staggering positive surprise on Tuesday will likely push the stock to new highs today. The company’s ability to continue to deliver despite its growing heft and increased competition is truly impressive. Yahoo (YHOO) was less than reassuring in its quarterly results, as the internet company continues to struggle with finding the right formula for turning around its online advertising business.
In finance, we had BlackRock (BLK), the largest money manager by assets, beat earnings and revenue expectations on the back of a 16% growth in assets under management. We had inline results from PNC Financial (PNC) and a solid beat from U.S. Bancorp (USB). We have Intel (INTC), eBay (EBAY), and Amerian Express (AXP) report after the close today.
This is not the first time that we are getting solid earnings reports. In fact, corporate profitability has been a stand-out performer all along in this cycle. What has been keeping the market in check lately is not concerns about earnings, but rather macro issues about the U.S. economy and European debt. None of those worries have gone away and will likely return in the coming days. But the shift in focus to earnings, howsoever temporary, is nevertheless welcome.
Sheraz Mian
Director of Research
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