The earnings parade continues, with Amazon.com (AMZN), Intel (INTC), Starbucks (SBUX), Ford (F), American Airlines (AAL), Colgate-Palomolive (CL), Chevron (CVX), and ExxonMobil (XOM) among some of the luminaries that have reported results since yesterday's close.
The reaction to those reports, and others, has been mixed at best.
The S&P futures are up two points and are trading 0.2% below fair value. The Nasdaq 100 futures are up 30 points and are trading less than 0.1% below fair value. The Dow Jones Industrial Average futures are down 23 points and are trading 0.1% below fair value.
Amazon and Ford are trading nicely higher as their earnings results and guidance, in aggregate, were pleasing. Conversely, Intel and ExxonMobil are trading noticeably lower as their earnings results and guidance, in aggregate, were disappointing.
You can keep going down the line and it will be a similar picture. Lots of company-specific responses, but no real market-moving thoughts in the responses other than perhaps the idea that the good news has been priced in to a large extent and that the bad news is presumably only temporary.
Hence, you get a market that spins its wheels.
The U.S. economy, apparently, wasn't spinning its wheels in the first quarter. It shifted into a high gear and sped out of the gate.
Real GDP increased at an annual rate of 3.2% (Briefing.com consensus 1.9%), according to the advance estimate for first quarter GDP. The GDP Price Deflator was up just 0.9% (Briefing.com consensus 1.4%) after increasing 1.7% in the fourth quarter.
The key takeaway from the report is that it reinforced the market's Goldilocks view of the U.S. economy, which is exhibiting solid growth and muted inflation pressures.
The biggest contributor to the gain in first quarter GDP was net exports. They added 1.03 percentage points, followed by gross private domestic investment, which added 0.92 percentage points, and then personal consumption expenditures, which contributed 0.82 percentage points.
The change in private inventories accounted for 0.65 percentage points of the contribution from gross private domestic investment. Real final sales of domestic product, which exclude the change in inventories, were up 2.5%. That was a smidgen above the prior ten-quarter average of 2.4%.
This was a good report, but remarkably, it hasn't had much impact on the futures market nor has it undercut the Treasury market. On the contrary, Treasuries have rallied following the report. The yield on the 10-yr note is down three basis points to 2.50% while the yield on the 2-yr note is also down three basis points to 2.28%.
That could be a function of expected capital flight as it is quite clear that the U.S. economy is faring quite well relative to other developed economies, namely Japan and Europe. We say "expected," because the euro is up against the dollar at the moment while the yen is unchanged.
In any case, with rates remaining low and global growth in question, there is a case to be made still for growth stocks to exhibit relative strength.