US equity markets snapped back from last Friday’s
US equity markets snapped back from last Friday’s pullback as investors hope Q2 earnings will continue to come in strong and that positive corporate reports would bode well for a continued US economic recovery. There is data backing up the good start to this season’s earnings reports: As of this morning, all but three of the 24 companies listed on the S&P 500 that have thus far reported earnings have exceeded analysts’ earnings-per-share forecasts.
However, after the bell, earnings enthusiasm appeared dampened, with IBM coming out with an earnings miss in regards to Wall Street’s quarterly revenue expectations. IBM said it saw a weaker euro hurt overseas sales. Also a disappointment was Texas Instruments’ earnings report. The stocks of both companies dipped in after-hours trading. Market observers say the failure of these two companies to impress investors could hurt the recent market rally where technology issues have taken a leading role (the Nasdaq 100 is up on nine of the last ten sessions).
According to the National Association of Home Builders/Wells Fargo Housing Market Index, home builder confidence in July sagged to its lowest level since April 2009 in regards to the market for newly built, single-family homes. Once again, the slowdown in sales is largely being attributed to the expiring of a government tax credit for home buyers. Some market observers say this shows how the US home buyers market had been propped up by government intervention. Some have called the short-lived boost the market received from a number of such credits a ‘sugar high’.
