There is a positive vibe in the stock market this morning, because Alphabet (GOOG) is trading lower after its earnings report. The positive vibe isn't because GOOG is down. The positive vibe flows from the fact that the stock market is indicated to open higher even though GOOG is down 2.7% in pre-market action.
The S&P futures are up six points and the Dow Jones Industrial Average futures are up 100 points. The Nasdaq 100 futures, though, are down two points.
Relative strength will be seen in the blue-chip averages for a change -- and for good reason. The earnings results reported by blue-chip companies were mostly better than expected.
Dow component Caterpillar (CAT) is among the standouts. It easily beat analysts' average expectations for sales and earnings and raised its fiscal 2017 outlook, citing increased demand across many end markets. CAT is trading 4.5% higher in pre-market action.
Fellow Dow component McDonald's (MCD) followed suit, topping analysts' average estimates with the help of a 6.6% increase in global comparable sales. MCD is trading 2.5% higher in pre-market action.
Eli Lilly (LLY), United Technologies (UTX), DuPont (DD), T. Rowe Price (TROW), General Motors (GM)... they all beat.
Dow component 3M (MMM) did not and is trading 2.4% lower in pre-market action. Kimberly-Clark (KMB), meanwhile, topped second quarter earnings estimates, but didn't report any sales growth and tempered its full-year earnings outlook.
Separately, Biogen-Idec (BIIB) soared past analysts' average expectations for second quarter sales and earnings and is indicated 4.5% higher in pre-market trading. Its strength has created a nice diversion from the hang-up with Alphabet's report, which was accented by strong revenue growth but higher-than-expected traffic acquisition costs.
The timing of the positive blue-chip earnings surprises couldn't have been better. Those reports have served as an important reminder that the earnings growth story is alive and well beyond the technology sector.
Accordingly, the standing of the futures market this morning suggests the blue-chip averages are poised to get a push today that should help narrow their performance gap with the Nasdaq Composite, which has been a distant leader this year thanks in large part to the outperformance of Apple (AAPL), Alphabet (GOOG), Microsoft (MSFT), Facebook (FB) and Amazon.com (AMZN).
A disappointing earnings report from Seagate Technology (STX), which came up well short of analysts' average earnings expectations, is expected to act as another drag on the Nasdaq. STX shares are down 18%.
What we have this morning, then, is strength that is rooted in blue-chip numbers. Rising oil prices ($47.17, +$0.83, +1.8%) and an assumption that there will be some sector rotation today are added elements of support that will be propping up the broader market as the technology sector presumably takes a backseat today.