Thursday's Market Minute: The Eye Of The Earnings Storm

Earnings season can feel like a Category 5 hurricane, and right now we’re entering the eye of the storm. Hundreds of firms have rained down financial data upon eager investors, and there are hundreds more still to follow.

To predict whether the current climate of strong corporate growth will persevere, it might be useful to take a look at some of this morning’s economic data. April showers did not, in fact, bring May flowers in the realm of Durable Goods orders, as New Orders suffered a 1.3% decline. But it appears that there were winds of change at play, with this morning’s report for June showing 2.0% growth in New Orders and beating estimates of a 0.5% rise. This sizable swing from decline to growth could bode well for earnings.

There’s also significance in this morning’s International Trade report. These figures are less optimistic for earnings, with exports down 2.7% in June after a 3.0% increase in the month prior – such a dip could signal that overall, U.S. firms have recently struggled to break into foreign markets. Companies have generally fared well so far this earnings season, with big names like Microsoft, Johnson & Johnson, IBM, and Visa all beating consensus estimates in the past week and a half. A Fed rate cut will most likely precipitate some volatility in the market, but between now and July 31, three more FAANG stocks ([Apple Inc , NASDAQ:AAPL), Alphabet Inc GOOG, Amazon.com, Inc. AMZN], Twitter Inc TWTR, McDonald’s Inc MCD, BP, and a slew of other firms will release quarterly data.

This morning’s economic data reports, with their conflicting implications, might be telling us that clear skies are no guarantee for earnings in the coming days.

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