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Second quarter earnings season kicks off

Jul 9, 2014 at 8:52 am in Market Commentary by contrarianuk

earnings s

After weeks of relying on economic data and the words of the world’s central banks to give an idea of the likely direction of the financial markets the focus is now switching to US corporate profitability with the beginning of the second quarter earnings season. Federal Reserve Chair Yellen and ECB President Mario Dragi have both been determined to underpin economic activity for as long it takes helping soothe any investor jitters. After the 35% rise in the Dow Industrials last year, the index is up another 5% year to date

In the current high liquidity environment boosted by asset purchases and ultra low interest rates, share prices have been pushed ever higher with bond yields and volatility levels at or near record lows. The Federal Reserve does not seem worried with their view that there are few signs of excesses in the markets.

Earnings of the S&P 500 companies are expected to grow 6.2% in the second quarter of 2014, down from the 8.4% growth forecast at the start of April. Revenue is predicted to rise 3% on average.

Aluminium producer, Alcoa, kicked off after the bell last night and marginally beat expectations with a 2.5% gain after hours. The company is often seen a global indicator of economic activity given aluminium is so key in manufacturing.

With a few days of market declines where the Dow Jones Industrials has retreated from over 17,000 and the FTSE 100 is flirting yet again with 6,700 rather than 7,000 the next few weeks should be fascinating to see whether corporate America is still managing to push the numbers higher.

With the last stock market correction over 33 months ago (with a correction a fall of 10% or more), the latest bull run is the longest since the crash of 1929.

Contrarian Investor UK

IMPORTANT: The posts I make are in no way meant as investment suggestions or recommendations to any visitors to the site. They are simply my views, personal reflections and analysis on the markets. Anyone who wishes to spread bet or buy stocks should rely on their own due diligence and common sense before placing any spread trade.

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