Stocks End Higher, More Earnings On Tap Image: Shutterstock Stocks closed modestly higher yesterday, erasing most of Monday's loss. Earnings continue to roll in. And once again, this earnings season is coming in better than expected. There's still lots of earnings season left. But what we've seen so far, the market has clearly liked. After the close yesterday, Amgen reported a positive EPS surprise of 1.07%, and a positive sales surprise of 1.00%. Toyota reported a positive EPS surprise of 86.1%, and a positive sales surprise 10.6%. And Ford posted a positive EPS surprise of more than 141%, and a positive sales surprise of 14.1%. Ford was up 4.14% in the regular session before earnings. And more than 6% following earnings in after-hours trade. Today we'll get another 155 companies on deck to report, including marquee names like Uber, Alibaba, and Yum Brands before the open. And Disney, ARM Holdings, and PayPal after the close. There was not much in the way of economic reports out yesterday. But we've got a few today with MBA Mortgage Applications, the International Trade in Goods and Services report, and Consumer Credit. And like yesterday, we'll hear from several Fed policymakers as they give speeches and interviews today. After last week's widely expected pause on rates, but somewhat unexpected language that rate cuts will likely start later rather than sooner (read that as May or even June, instead of March), the focus is now on when the rate cutting begins. The Fed seemed to have kept their stance on three, 25 basis point rate hikes this year. But beyond that general thinking, they have been mum on when. While it appears we know when it won't be (not March), the jury is still out on the timing after that. Although, the market will soon have to wrestle with the disconnect on how big the cuts will be. While the Fed continues to suggest 3 hikes (or 75 basis points), plenty in the market are still expecting 4-5 rate cuts (100 to 125 basis points). That question is probably more important than the when quite frankly. But once the cuts start, the focus on how many will naturally take its place. Stocks, in general, are doing well this year. The Dow is up by 2.21%, the S&P is up 3.87%, and the Nasdaq Composite is up 3.98%. But the small-cap Russell 2000, and the mid-cap S&P 400 are still underwater by -3.62% and -1.15% respectively. Large-caps, especially large tech names, have dominated once again. But I expect to see the mid and small-caps play catch up soon enough. So don't forget about those. And there have been plenty of mid-cap and small-cap stocks crushing it this year. So if you're looking for bargains, or at least just some new names to add to your portfolio, be sure to look beyond just large-cap stocks. Nevertheless, the big three indexes are all trading near their all-time highs. And it looks like there's plenty more upside to go. See you tomorrow, Kevin Matras Executive Vice President, Zacks Investment Research |
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