CNBC's Domm: Today's Agenda in the Markets
Stocks are set to continue their move upward this morning, after world markets joined the Wall Street buying spree that pushed the Dow above 13,000 for the first time and brought the S&P 500 within striking distance of its 2000 high. Stronger-than-expected earnings continue to set the tone this morning, with reports from Ford, Exxon Mobil and 3M already in and Apple still aglow from yesterday's strong profit report.
The euro hit another all-time high against the yen and gave the dollar some slack this morning. That doesn't change the trend of the dollar heading for a new low, which is showing up in earnings news in a big way.
There's a flood of big companies reporting today, including Microsoft after the bell. Dow components Exxon and 3M both beat earnings-per-share estimates handily this morning. Ford, as many multinationals, surprised to the upside with a narrower 9-cents-a-share loss, compared to the 60-cents-a-share loss expected.
"What we're seeing here is very effective cost cutting and much better than expected revenues," says our Phil Lebeau who follows the auto industry. Lebeau will speak with Ford's Alan Mulally on "Power Lunch" today. Ford, of course, is also saying it benefited from currency translation.
Reuters reports that 69.7% of the 247 companies in the S&P 500 that have reported first-quarter results as of yesterday beat earnings per share expectations. 13.4% reported earnings in line, and 17% missed estimates. Interestingly, the percent difference between the actual earnings numbers reported and the Wall Street consensus estimates is 11.2%. That's the same percentage difference in last year's first-quarter results was 4.9%, once all companies reported. So it's no surprise, but the size of the surprises this quarter are much bigger. For the quarter last year, 68.6% of S&P 500 companies beat estimates.
"It's all currency juice," says our Steve Liesman, who has been crunching numbers all night for a special report he will do today on the impact of currency on this quarter's earnings. He looked specifically at the Dow components that have reported so far. "The results are huge," says Liesman. "The results are in the multi billions of dollars ... It explains one third of the upside surprises on the revenue estimates." We'll see Liesman's report when he does an easel in "Power Lunch" today.
There's little economic news to drive direction today. There are a few Federal Reserve speakers out on the circuit, including Fed Governor Frederic Mishkin, who speaks at 1230 p.m. New York time on globalization and financial development at the IMF in Washington. San Francisco Fed President Janet Yellen speaks about the prospects for the U.S. Economy to the "Money Marketeers" of NYU this evening.
The Dow gained 1% yesterday, or 135.95, taking it to a record close 13,089.89 and a new intraday high of 13,107.45. The S&P hit a six-year high and is now just 32 points, or 2.1% away from its record March, 2000 close of 1,527. It also gained 1% yesterday. The NASDAQ rose 0.9% on the day.
The trend to stronger growth outside the U.S. is playing out in both the stock market and bond market. In the stock market, stronger-than-expected earnings reports helped drive the market to record levels, and in the bond market, foreign rates are outpacing domestic.
Also helping stocks is the fact that U.S. companies have been on a shopping spree for their own shares at a time of strong global demand for equities.
"Less stock available to trade, higher international sales despite a sluggish U.S. economy. That is why the U.S. stock market is going up. This is a text book example of how the world has changed. It's the globalization that matters," says our Bob Pisani.
He points out that companies like Amazon.com and Apple had robust earnings reports, beating estimates by a wide margin, but they also were cautious in their guidance.
As far as bonds, "U.S. 10-Years compared to European 10-Years are at the smallest premium in 2-1/2 years. Overseas rates are rising faster than ours and one could even say they are influencing our rates from going down on a moderate growth outlook for the U.S.," says our Rick Santelli from his home in the Chicago futures pits.