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Imminent Greek Deal Helps Stocks, but Earnings Coming

A stronger euro, weaker dollar has helped equities all day as the markets believe a Greek deal is imminent. At 2 PM ET the Greek Prime Minister spoke, appealing for passage of the unpopular austerity act, and markets rose to the high of the day.

The big picture soon will turn to earnings....there has been no appreciable change in earnings expectations for the S&P 500 in the past two months, either for Q2 or the full year...but the S&P 500 is down 6% from the highs at the end of April...the market is telling us earnings expectations seem too high.

We are expecting fairly robust Q2 numbers: revenue growth of 10 percent for the S&P 500, earnings growth of 16 percent.

Sixteen percent is definitely robust earnings growth...and to top it off companies are consistently beating the estimates. In Q1, for example, analysts were looking for 13 percent earnings growth, we got close to 20 percent.

Can that trend continue in Q2 and the rest of the year?

Traders are very skeptical it can. One complaint: much of the earnings growth in Q2 is coming from energy and materials sector—thanks to higher commodity prices!

Those prices, it appear, are moderating. That's good news for consumers, but it will likely keep guidance from commodity producers on the conservative side.

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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