Earnings season is euphemistically referred to as silly season and it is easy to understand why. Some companies report lousy results and see their stocks trade higher. Other companies report great results and see their stocks trade lower. It is a time when the stock market, which is supposedly driven by earnings, can rally around news that a company lost less money than expected.
The silliness is shining through today as word from Ford (F) that it lost "only" $1.8 billion, or $0.75 per share, on an after-tax basis has been an underpinning factor for the futures market. Ford had been expected to lose $1.23 per share.
Although Ford isn't earning any money, it is earning the market's faith in its turnaround effort, as the company maintains it is on track to meet or beat its financial targets and that it does not expect to seek a bridge loan from the U.S. government. For now, Ford seems to be benefiting from the view that it is the best of a bad lot.
The market, meanwhile, continues to benefit from the belief that the worst of the economic downturn is over. Time will tell, but we have heard a growing number of companies pay lip service to that idea when reporting their earnings.
Some companies that did, in fact, report earnings for the March quarter following yesterday's close include Microsoft (MSFT), American Express (AXP), Amazon.com (AMZN), Amgen (AMGN), Burlington Northern (BNI), Chubb (CB), Schlumberger (SLB), 3M (MMM) and Honeywell (HON).
In most cases, the results were better than expected, which is consistent with the trend since the start of the reporting period.
Earnings news, however, is taking a backseat as the main focal point to the government's release this afternoon of the details regarding the manner in which it conducted stress tests for 19, leading U.S. banks. The actual results of the stress tests won't be made public until May 4.
With plenty of assumptions being made about the stress tests -- some good, some bad, but many cynical -- it is understandable that the financial stocks have been on a real roller coaster ride this week.
In other developments, the headline number for March durable orders was better than expected as it was down -0.8% versus a consensus estimate of -1.5%. Excluding transportation, orders declined -0.6%, which was also better than expected (consensus -1.2%).
There were downward revisions for the February data for both components. Orders were shown to be up 2.1% versus an originally reported increase of 3.4% while the ex-transportation number was up 2.0% versus an originally reported increase of 3.9%.
Looking within the March report, shipments were down -1.7% after a -0.8% decline in February. That won't factor well for Q1 GDP. Meanwhile, the continued weakness in business investment was evident with a -1.7% drop in nondefense capital goods, excluding aircraft. That followed a 0.1% increase in February and a -9.4% decline in January.
This report is mixed news at best as far as expectations are concerned and it isn't particularly good news as far as the economy is concerned. By and large, it hasn't been much of a factor in terms of influencing market sentiment. The New Home Sales report follows at 10:00 ET (consensus 337K).
The S&P futures, as of this posting, are indicating the market will gain about 0.3% at the start of trading.
http://www.briefing.com/GeneralCont...me=Investor&ArticleId=NS20090424085456PageOne
Losing a generation of investors puts that much more stress on retirement portfolios as money that might otherwise have gone into the stock market, will now find safer vehicles in cash instruments. Traders are not the ones affected in this article, it's the Mom and Pops out there who are just trying to follow perceived rules when it comes to planning their retirements.
