EmailThe catalysts are in place for another positive session for the equity market as a host of companies have reported earnings since yesterday's close that exceeded analysts' expectations.
IBM (IBM, beat by $0.14), Google (GOOG, beat by $0.09), McDonald's (MCD, beat by $0.05), Norfolk Southern (NSC, beat by $0.10), WellPoint (WLP, beat by $0.08), and United Technologies (UTX, beat by $0.01) are chief among them. Coach (COH), though, is a notable exception, missing the Capital IQ consensus estimate by six cents on weak North American sales. Shares of COH are down 16% in premarket trading.
Alas, while the vast majority of earnings headlines have measured up, the response hasn't -- at least not yet anyway. It would be remiss not to add that top-line growth remains anemic. For example, both IBM and Norfolk Southern saw revenues decline 0.6% and 4.0%, respectively, versus the year-ago period.
The S&P futures are down two points and are trading in-line with fair value. That is a bit surprising considering IBM and Google are both trading 4.0% higher in premarket action. As of now, the cash market is on course for a flattish start.
For a market that has gained 4.7% already this month, flat isn't a bad indication by any means. It may perhaps show, however, that there is a burgeoning sense that the market is short-term overbought and due for a profit-taking breather.
Or not.
The market has shown a proclivity of late to start slow and to finish fast with a bullish bias as sidelined cash fears missing out on further gains. That was the case again yesterday as the S&P 500 popped to a new, 5-year high in the closing minutes.
This morning's stall is probably due in part to the understanding that Apple (AAPL) reports after the close tonight. The Capital IQ consensus estimate of $13.55 is 2.3% below the year-ago level. If Apple ends up reporting a decline in earnings, it would be the first decline in more than nine years.
In addition, the House of Representatives will reportedly vote on a bill today that extends the debt ceiling to May if lawmakers also agree to a provision that their pay will be suspended if they do not agree to a budget by April 15.
It is an interesting caveat that makes passage of the temporary debt ceiling increase an uncertain proposition. Since the moment is at hand, that uncertainty is enough of a deterrent to keep buyers sidelined for the time being despite the good earnings news.
Elsewhere, most European markets are showing modest losses in front of the US open. Asian indices were mixed, although Japan's Nikkei dropped 2.1% in a profit-taking trade attributed to a sense of disappointment that the Bank of Japan won't begin its open-ended asset purchase plan until 2014.
