Stocks may find it hard to stay focused on the day’s earnings parade given the continued stalemate in Washington on the debt ceiling issue. We also have a couple of housing and consumer confidence reports coming out after the markets open. But had Washington not been as distracting as it has been lately, corporate earnings would be the most important news of the day.
The markets have remained fairly stable thus far even as we get closer to the debt ceiling’s August 2 deadline. With the exception of the gold, no asset class appears to be worried. And this is hardly a sign of complacency. The markets may not be as efficient as some academics believe, but they are smart enough to evaluate America’s financial health. While default and rating downgrades are no doubt headline-grabbing events, the markets have thankfully been able to look past them thus far.
On the earnings front, we got better-than-expected earnings from from Ford (F) on the back of solid top-line gains. We also got a solid EPS and revenue beat from Cummins (CMI). 3M (MMM) posted inline EPS on a shade higher-than-expected revenue, with Japan and weak LCD TV end market weighing on results.
We also got less than reassuring results from UPS (UPS). While the package delivery firm was able to modestly come ahead of expectations, they described the economic backdrop to be ‘uneven.’
Netflix (NFLX) posted better-than-expected results after the close on Monday, but its guidance was less than reassuring. Texas Instruments (TXN) posted a modest EPS and revenue beat, but provided a soft outlook. Broadcom (BRCM) came ahead of expectations and provided positive guidance. We have Amazon (AMZN) reporting after the close today.
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