Earnings remain trouble spot in choppy week for US stocks

This week saw much choppier trading: Monday, down big; Tuesday, down small; Wednesday, up big; Thursday, modestly down. At the open on Friday, it all adds up to a practically flat week so far.

Still, the S&P 500 is less than three percent from an all-time high.

One bit of good news for U.S. stocks. Oil has been weaker on still-high U.S. stockpiles and a firmer dollar, but it's not taking down the markets. West Texas Intermediate, for example, is down 7.1 percent this week, including another two percent this morning, but the S&P 500 is down only 0.3 percent, though the energy sector is down 2.4 percent.

Still, I remain troubled by the earnings outlook.

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Intel lowered its first quarter 2015 revenue guidance from $13.7 billion to $12.8 billion. The announcement rippled through the markets yesterday, and did cause some to lower earnings guidance. As I have noted, weak oil revenues and now the strong dollar is really weighing on earnings expectations for the markets.

S&P 500 earnings estimates (Source: Factset)

  • Q1: down 4.9 percent
  • Q2: down 1.7 percent
  • 2015: up 2.2 percent

This will be the first down quarter since the third quarter of 2009.

Speaking of Intel's revenues, Michael O'Rourke and others have pointed out that the promise of higher revenues has been around for years, and has consistently been dashed. Look at Intel's revenues since 2011:

Intel Q1 revenues (billions)

  • 2011: $12.8
  • 2012: $12.9
  • 2013: $12.6
  • 2014: $12.8
  • 2015 (est.): $12.8

Nada. Nothing. No gains. And no gains in 2015 either! This is a major problem and is not confined to Intel!

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It's a lot brighter outside the United States this week, where the strong dollar and active quantitative easing programs in Japan and Europe have helped drive up equities in those respective regions:

World markets this week

  • Germany: up 1.8 percent (near historic high)
  • Italy: up 1.6 percent (near a three-year high)
  • France: up 0.3 percent (highest since 2008)
  • Japan: up 1.4 percent (15-year high)
  • China: up 4.1 percent (near 2008 high)
  • Bob Pisani

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

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