There’s a negative tone to the futures market this morning after some notable earnings disappointments since yesterday’s close. First, Intel (INTC) reported after the close yesterday and issued disappointing guidance, sending shares down 8%. It’s not often that INTC trades down that much in reaction to earnings. Using our Earnings Explorer tool, we found only six other quarters since 2001 where the stock gapped down 8%+ on an earnings reaction day. INTC’s weakness is also casting a pall on the entire semiconductor sector, which had been leading the market. Another notable earnings miss to note is Exxon Mobil (XOM), which literally just reported weaker than expected earnings, missing the consensus EPS forecast of 69 cents by 14 cents and also reporting revenues shy of expectations.
While INTC and XOM were two notable misses, the overall tone of earnings since yesterday’s close has been pretty positive. Of the 125+ companies that have reported, 65% have exceeded EPS forecasts while 53% have managed to exceed revenue estimates. In terms of guidance, 8 companies raised forecasts going forward while only 5 lowered the bar.
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Each Thursday afternoon in our Sector Snapshot report, we provided up to date charts of S&P 500 sectors looking at each sector’s trading range, percentage of stocks above their 50-day moving average, ten-day A/D line, relative strength, and P/E ratio. In looking through the relative strength charts yesterday, one interesting trend that stood out was the relationship between the Health Care and Technology sector. Looking at the chart below, it’s pretty easy to see that just about all of the rotation out of the Health Care sector that began towards the end of last year went right into Technology.
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