Market Drivers: Earnings Results and Fed Talk

3D Printer at the Fab Lab

3D Printer at the Fab Lab (Photo credit: kakissel)

Markets are moving higher again this week as we kicked off Q2 earnings season. We also received a mid-week boost from Fed Chairman Ben Bernanke’s speech and comments on the Fed’s asset purchasing program. Here are three things that have been driving the market this week.

Q2 Earnings Outlook

As we head into the Q2 reporting season, S&P Capital IQ is calling for EPS gains in the S&P of 2.9% and top-line growth of -0.2%, or essentially flat. On average 65% of companies that report beat estimates and it appears that given how low expectations have come down over the last few months, this once again should be an attainable goal. However the real scrutiny will come on the revenue side, where we have seen an unusually high proportion of companies that are coming up short. We should also see some increased focus on forward looking guidance into the second half of 2013. As the year kicked off, many had been looking to ramped up growth in the tail end of the year. Now as we close out the first half of the year investors will be looking to see if these projections will hold true, or will we have more negative revisions.

Notable Earnings Results

On Monday afternoon Alcoa kickoff of Q2 earnings season by beating earnings estimates, however their revenues represented a 1.9% year over year decline  In early trading Tuesday AA shares held small gains, but slipped as the trading day began. Wolverine World Wide (WWW) fared better after beating earnings, and narrowly missing on revenues, with shares rallying by over 5% following their release. Family Dollar shares were up sharply after the discount retailer posted better numbers on both lines, and restaurant company Yum! Brands saw little price change after reporting a bottom-line beat on revenue slightly below analyst expectations.

Fed Minutes

The release of the Fed minutes on Wednesday afternoon did little to surprise the market, with major indexes finishing the session largely unchanged. However the comments by Fed Chairman Ben Bernanke after the close sent futures higher. In his speech, he noted “low inflation and high unemployment mean the Fed needs to continue with its stimulus measures." Bernanke also backed sustained monetary stimulus and said “highly accommodative monetary policy for the foreseeable future is what’s needed in the U.S. economy." It appears that the dovish stance from the Chairman has soothed some of the jitters that had been prevalent in the market during recent weeks, with gold prices rallying and 10 year treasury yields falling following the commentss.

Weekly Bonus –  Liquid Metal Printers?

Recent advances in technology have brought us 3D printers which can actually “print”  three dimensional objects, usually out of some sort of plastic or synthetic substance. Well, now researchers at North Carolina State University have found a way to “print” objects out of a liquid metal droplets! The finished products end up looking eerily like the alien robot from “Terminator 2”, but the objects turning out significantly more delicate (they compare the forms to stacks of tiny water balloons). However with further advancements and research the real world applications, could be limitless.     

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