Q2 Earnings And Economic Data In Focus

Each Thursday morning we see new results from Initial Jobless Claims, and today is no exception. A total of 244K claims were made in the past week — 10K more than the previous (revised) week of 234K claims — on 1.964 continuing claims, both on the high side of what we’ve seen over the past quarter year or so, but both within psychologically comfortable ranges: initial claims between 225-250K and continuing claims sub-2 million.

June Durable Goods numbers also hit the tape ahead of Thursday’s market open, and the 6.5% headline number was twice what was expected by analysts. But the interesting thing about this data happens below the headline: strip out Transportation costs and this number drops to 0.2%. Simply say ex-Defense, however, and we see a 6.7% figure.

What does this mean? Well, take a look at Boeing’s (NYSE:BA) blockbuster Q2 earnings report yesterday — the airplane maker saw huge new orders on the books, and this alone was enough to shift today’s Durable Goods number to well ahead of expectations. Further, we’re not seeing military aircraft being ordered but commercial aircraft. Don’t expect these types of numbers to be consistent, however; once planes orders are sated, they tend to lag in future Durable Goods reads.

When we look at this data, implicitly what we’re doing is gauging whether the Fed will pump the brakes on its intended actions in the near future. As we saw yesterday, the Fed sees inflation rising at sub-2%, which was their target, and in its latest statement its balance sheet policy remains unchanged.

The Fed also has signaled that it will begin unwinding its bloated $4.5 trillion balance sheet, and when it does we will see interest rates rise. This will pull up bank stocks, in turn, but may create some headwinds in re “cheap money” that the U.S. has been enjoying throughout the recovery from the Great Recession more than 8 and a half years ago.

Q2 Earnings Roundup

Zacks Rank #1 (Strong Buy)-rated Twitter (NYSE:TWTR) well outpaced estimates on its bottom line, posting earnings of 12 cents per share, tripling the 4 cents expected in the Zacks consensus estimate. The 574 million in revenues also outperformed the $537 million expected, but flat user growth has pushed TWTR stock into negative territory. Especially considering Facebook’s (NASDAQ:FB) dominant Q2 earnings report after the bell yesterday, user growth is key in the social media market. Twitter shares are currently down roughly 10%.

Cable multi-service operating giant Comcast (NASDAQ:CMCSA) beat earnings estimates by 34 cents per share when it posted 52 cents prior to today’s opening bell. Its $21.2 billion in revenues for the quarter topped the $20.8 billion expected. The Zacks Rank #3 (Hold) company with a Zacks Style Score of A reported high-speed Internet costs up 5.5% year over year.

Verizon (NYSE:VZ) just met the 96 cents per share in the Zacks consensus estimate. Revenues, however, beat expectations: $30.55 billion versus $29.91 billion. Retail post-paid churn was flat year over year, and retail connections were up 1.2%. The company was a Zacks Rank #3 stock before its Q2 earnings report was released.

MasterCard (NYSE:MA) beat estimated by 6 cents to $1.10 per share, and sales of $3.05 billion topped the $2.97 billion expected. Shares are up 1.5% in the pre-market. Dr. Pepper Snapple (NYSE:DPS) missed bottom line estimates of $1.28 per share by 3 cents. Revenues, however, topped the $1.77 billion expected and posted $1.80 billion.

This is the busiest day of Q2 earnings season today. We’re climbing the mountaintop, folks.