Odds of a double dip continue to drop. We now have three companies in three different fields that have not tried to dampen expectations for the second half of the year: Intel in tech, CSX in transports, and Alcoa in aluminum.
Indeed, two of the three have spoken positively about the second half: INTC talked about strong gross margins in Q3 as well as revenues that will surpass analyst expectations ($11.2 billion to $12 billion vs. consensus of $10.9 billion), and CSX said Q3 volumes and revenue appeared favorable across all segments.
While this is good news, watch the stock reaction: CSX ended down yesterday, and while INTC is up 5 percent pre-open (other semis are also up 2 to 5 percent), that may moderate as the day wears on.
Tech traders will likely want to hear from the original equipment manufacturers (OEMs) like Dell and Hewlett-Packard before deciding there is a real increase in PC demand.
Elsewhere:
1) Yum Brands falls 3 percent despite beating Q2 earnings estimates($0.58 vs. $0.55 consensus). Same-store sales overseas (up 1 percent overall, up 4 percent in China) slightly edged out flat domestic sales. In the U.S., stronger sales at Pizza Hut (up 8 percent) and Taco Bell (up 1 percent) offset sales declines at KFC (down 7 percent).
Despite the earnings beat, Yum's raised full-year guidance disappointed ($2.43 vs. $2.48 consensus) as it warned of higher commodity and labor costs in China during the second half of the year.
2) Goldman Sachs downgrades the homebuilding sector to neutral: "a review of the leading job indicators are a driver of our downgrade." The PHLX Housing Sector Index , a basket of homebuilding and building material stocks, is down 22 percent since April 30, when the federal homebuyer tax credit expired.
3) Speaking of housing: the Mortgage Bankers Association (MBA) reported that mortgage applications to purchase homes fell to a 13-year low, falling 3.1 percent in the last week. Refinancing applications weren't much better, as they fell 2.9 percent despite rates remaining low at 4.69 percent.
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