US Earnings Preview For Jul 27-31

Nearly 750 companies will report, of which 144 are in the S&P 500. Dow components include Exxon Mobil (XOM), Chevron (CVX), Travelers Companies (TRV), Verizon (VZ) and Walt Disney (DIS).

The energy sector will be prominent with 57 oil and gas firms releasing results.

Competing for investor dollars will be the U.S. government. A record $115 billion in 2-, 5- and 7-year bonds plus index-adjusted treasuries (TIPS) will be auctioned this week. In addition, there will be several auctions of short-term bills. June’s large auctions were met with strong demand, but at some point, the new supply is going to drive up yields.

We’ll get our first look at second-quarter GDP on Friday. The consensus estimate calls for a 1.5% contraction, though Zacks Equity Research is predicting a 1.4% decline.

The Fed’s periodic Beige Book will be published on Wednesday afternoon.

• Monday: New home sales
• Tuesday: July Conference Board Consumer Confidence, S&P/Case-Schiller Home Price Index
• Wednesday: June durable goods orders, Federal Reserve Beige Book, weekly crude inventories
• Thursday: weekly initial jobless claims
• Friday: Advance Q2 GDP, July Chicago PMI

San Francisco Fed President Janet Yellen will discuss her economic outlook with the Idaho/Oregon Bankers Association on Tuesday morning. New York Fed President William Dudley is scheduled to speak to the Association for a Better New York on Wednesday. He will also discuss the economy.

The big question is whether the market can sustain its upward momentum. Though volume has largely remained below average - and continues be significantly less than what we saw in April - stocks are in a bullish mode. Plus, 4.6 companies have topped expectations for every one that has missed - a high proportion.

Understand, however, that what we’re seeing is mostly a game of hot potato. Fast money is moving the markets and can change direction without warning.

Companies That Could Issue Positive Earnings Surprises

Four brokerage analysts raised their second-quarter forecasts on Apache (APA) within the past 7 days. The revisions bring the total number of positive changes made over the past 30 days to 9. Combined, the new forecasts have pushed the consensus earnings estimate 16 cents higher to $1.00 per share. The most accurate estimate is more bullish at $1.07 per share.

APA has beat twice and missed twice during the past 4 quarters, so there is some risk to this call, but you have to like the rising forecasts. Apache is scheduled to report on Thursday, Jul 30, before the start of trading.

Corning (GLW) twice raised its guidance for second-quarter LCD glass volume. The revisions have led to a steady increase in the average forecast. The consensus earnings estimate of 30 cents per share is 5 cents above the average forecast of a month ago. The most accurate estimate is even more bullish at 32 cents per share. GLW has topped expectations during 2 out of the last 3 quarters, though its fourth-quarter results were disappointing. Corning is scheduled to report on Monday, Jul 27, before the start of trading.

Life Technologies (LIFE) has topped expectations for 10 consecutive quarters. Recent, positive revisions by 3 covering brokerage analysts suggest the company could beat again. The second-quarter consensus earnings estimate of 66 cents per share is a penny above the average forecast of a week ago. The most accurate estimate is more bullish at 68 cents per share. Life Technologies is scheduled to report on Tuesday, July 28, after the close of trading.

Western Digital (WDC) has topped expectations by an average margin of 16 cents per share during the past 4 quarters. Brokerage analysts are anticipating another comparatively good report, as 5 have raised their second-quarter forecasts within the past 30 days. The revisions have resulted in a 5-cent increase in the consensus earnings estimate, pushing it up to 27 cents per share. The most accurate estimate is more bullish at 33 cents per share. Western Digital is scheduled to report on Tuesday, Jul 28, after the close of trading.

Companies That Could Issue Negative Earnings Surprises

Eight analysts have cut their second-quarter projections on Chevron (CVX) within the past month, including 3 during the past week. The negative revisions caused the consensus earnings estimate to fall 20 cents to 97 cents per share. The most accurate estimate is more bearish at 94 cents per share. CVX has missed twice during the past 4 quarters. Chevron is scheduled to report on Friday, Jul 31, before the start of trading.

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