With Greece relatively quiet and not much on the domestic economic calendar, stocks remain in an tentative mood, with a couple of positive earnings reports helping boost sentiment a bit.
Greece is no longer the threat to the long-term survival of the Euro-Zone as it was a couple of years back, but it’s nevertheless a headwind for the regional economy as it comes at a time when Europe has been trying to get out of its economic slump. Greece will have to exit the union if it can’t meet the creditors’ stipulations. But that’s not in anyone’s interest, particularly in Greece’s. As such, it is reasonable to expect that a deal will be struck in the end. But you can’t have a Greek drama without the associated ups and downs; that’s what we are going through at present.
On the earnings front, including this morning’s reports from Coca-Cola (KO), CVS (CVS) and others, we now have Q4 results from 340 S&P 500 members that combined account for 78.2% of the index’s total market capitalization. Total earnings for these companies are up +6.9% from the same period last year on +1.5% higher revenues, with 71.2% beating earnings estimates and 55.3% beating top-line estimates.
The Energy drag as a result of weak oil prices notwithstanding, the beat ratios and earnings growth rate in Q4 thus far is roughly in-line with what we have been seeing from the same group of companies in other recent quarters. But revenues are on the weak side. Importantly, estimates for the current and following quarters have been coming down sharply, with the Energy sector again playing a leading role. As mentioned before in this space, the entire expected growth rate for the first half of the year has effectively disappeared in recent days.
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