Wednesday, April 18, 2012
Stocks will likely take a breather today following the strong gains on Tuesday, particularly given the absence of any major economic reports on the docket. It is quite out of Spain today as well following that country’s over-subscribed auction of shorter maturity bonds on Tuesday. A key test comes on Thursday when Spain has to auction two and 10-year government bonds, which will provide a better measure of investor confidence in the country’s outlook.
On the earnings front, the first quarter reporting season is off to a fairly good start, both relative to expectations as well as relative to where we were at this stage in the preceding quarter. With about 10% of the results already in, earnings are up 3.7% from the year-earlier level. At this admittedly early stage, roughly 77% of the companies have come out ahead of expectations, with a median earnings surprise of 3.9%. We will have a much better sense of the aggregate earnings picture in the coming days, but some of the exaggerated pre-season fears were likely off the mark.
Of this morning’s major earnings releases, we got positive earnings and revenue surprises from Halliburton (HAL) and Abbot Labs (ABT). Yahoo (YHOO) came out with better than expected results after the close on Tuesday, while results from Intel (INTC) and IBM (IBM) proved less inspiring. We have results from eBay (EBAY) coming out after the close today.
In corporate news, Pfizer (PFE) is reportedly close to finalizing a deal to sell its infant formula business for $9 billion to Nestle. This is part of Pfizer’s ongoing plan to shed non-core businesses to focus more on its core drugs franchise. Headlines about Warren Buffet’s health will likely keep Berkshire Hathaway (BRK.B) in the spotlight today.
Director of Research
ABBOTT LABS (ABT): Free Stock Analysis Report
BERKSHIRE HTH-B (BRK.B): Free Stock Analysis Report
EBAY INC (EBAY): Free Stock Analysis Report
HALLIBURTON CO (HAL): Free Stock Analysis Report
INTL BUS MACH (IBM): Free Stock Analysis Report
PFIZER INC (PFE): Free Stock Analysis Report
YAHOO! INC (YHOO): Free Stock Analysis Report
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