Epic Earnings: Many US Companies Beating Expectations As Season Continues

It’s an epic earnings day on Wall Street, as a collection of massive U.S. companies report results, including Apple Inc AAPL and five other Dow components. Fed speakers and housing data help round out the schedule.

Earnings just keep rumbling on here as we near the end of October, and so far, there’s been little not to like. To date, more than 75% of companies have beat expectations, and, in a truly positive sign, nearly 80% have beaten Wall Street’s consensus estimates on the revenue side of the coin. Futures trading pointed toward a slightly higher open.

Approximately 180 S&P 500 companies report results this week, and it seems like a big portion of them come today. Among the big names are Merck & Co., Inc MRK, Eli Lilly and Co LLY, 3M Co MMM, and E I Du Pont De Nemours And Co DD. And waiting in the wings is Apple, which reports after the close (see below). Expect the flavor of the market this week to mostly be shaped by individual company earnings stories, and remember, there’s still a lot to come after today, with names like Boeing Co BA, The Coca-Cola Co KO, Tesla Motors Inc TSLA, Alphabet Inc GOOGL GOOG, and Amazon.com, Inc. AMZN on tap in the coming days. By the end of the week, investors should have pretty good insight into the health of big U.S. companies.

Earlier today, another biggie reported, as Caterpillar Inc. CAT surpassed earnings per share estimates but didn’t match Wall Street analysts’ estimates on revenue. The company also lowered its full-year guidance, and, in a statement, cited “economic weakness throughout the world.” But MRK shares zoomed up 3% early Tuesday after the company solidly beat on earnings and revenue. 3M, Procter & Gamble Co PG and DD also beat estimates.

Bond prices remain under pressure, in part from solid U.S. economic data, and the yield on U.S. 10-year Treasury bonds is back above 1.75%. It’s also noteworthy that the yield curve is on its way up, meaning the spread between short-term and longer-term yields is increasing. This can be a positive factor for the financial sector, and sure enough, financials are up nearly 2% over the last week, solidly ahead of the broader market.

Consumer confidence reached nine-year highs last month, and we’ll find out if that lasted into October when the Conference Board reports at 10 a.m. ET today. Perhaps a better measure of consumer confidence is durable goods data, due Thursday morning. And the Case-Shiller 20-city housing index and the FHFA Housing Index, both out this morning, might also provide more insight into the consumer economy.

Atlanta Federal Reserve President Dennis Lockhart speaks this afternoon. Chicago Fed President Charles Evans made some dovish remarks on Monday about potentially keeping the federal funds rate lower for longer.

Are Samsung’s Struggles Handing AAPL a Bigger Slice of Market? As anyone who’s been on an airplane flight recently probably knows, airlines have banned Samsung’s Galaxy 7 phone because it might be a fire hazard, and the phone has been recalled. Did this steer additional customers to Apple, which reports earnings after the close today? That’s one thing to keep an eye on, and investors might also be curious to see how AAPL’s new iPhone 7 did during its first months on the market. Though the iPhone 7 and Samsung’s struggles could take the headlines, it’s also worth watching to see if AAPL continues to see falling sales overall, as it has the last two quarters. The phone market keeps getting tougher, and in Q2, AAPL’s sales fell 15% from a year earlier, the second quarter in a row of falling sales. For Q3, analysts surveyed by Briefing.com expect earnings per share of $1.65, down from $1.96 a year ago, but the company’s share price remains near its high for the year.

Going Opposite Ways? Stocks were tracking crude oil rather closely last week, but the relationship appeared to break down a little on Monday, as the S&P 500 Index SPX rose nearly 0.5% while front-month U.S. crude futures fell around the same amount, dipping below $50 a barrel during the session before recovering slightly. Pressure on oil came from the fundamental side, as Iraq said it wouldn’t necessarily abide by an OPEC output freeze. But later in the day, Iran said it would encourage other countries to join. Oil futures have been trading back and forth near the $50 level for several weeks, perhaps a sign of how difficult it is to pierce this mark. Last week saw 11 new oil rigs added to U.S. production, according to the Baker Hughes weekly report, if anyone needed a reminder that higher prices often lead to more U.S. drilling, which can lead to lower prices.

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