Q2 Earnings Season Gets Off To A Good Start

This week, Q2 earnings season heats up in a big way, with roughly 60 companies in the S&P 500 reporting earnings. As per typical, early earnings season is heavy with financial institutions, although we also expect results from big non-financial names like Netflix (NASDAQ:NFLX) and Intel (NASDAQ:INTC) later in the week.

Prior to today’s market open, Zacks Rank #3 (hold)-rated Bank of America (NYSE:BAC) outperformed expectations on both its top and bottom lines for Q2: 63 cents per share topped the Zacks consensus by 6 cents, on revenues which narrowly edged the $22.5 billion expected. Year over year, BofA earnings were up 43% in the quarter, while on the top line they fell 1% from the June quarter 2017.

Higher interest rates supported the banking major, which noted 7% year over year growth in trading income and +5% in net interest income. This was slightly offset with investment banking down a tad year over year. For more on BAC’s earnings, click here.

Also, investment firm BlackRock (NYSE:BLK) also surpassed estimates this morning. The fellow Zacks Rank #3 (Hold) company put up $6.66 per share from the $6.60 expected — up 28% year over year. Revenues of $3.61 billion easily outpaced the $3.45 billion analysts had been expecting, up 11% from the year-ago quarter. Net income rose 26% from Q2 2017. For more on BLK’s earnings, click here.

We also see new economic data ahead of today’s opening bell, with June Retail Sales and July Empire State reads providing fresh details illustrating our continued robust domestic economy. Retail Sales last month reached +0.5%, exactly in-line with expectations. However, revisions to May were the big story — raised an additional 50 basis points to 1.3% Retail Sales Growth that month.

For June, we strip out auto sales and still see a strong +0.4%, up from the 0.3% expected. This not only spells continued strength for the less volatile segments of the retail space, but for auto sales themselves: many analysts had been looking for a continued pullback in new auto sales, but +0.1% makes those fears look a bit unfounded, at least month over month. Again, May ex-auto numbers were revised upward.

Finally, the Empire State report for July outperformed expectations, posting 22.6 instead of the 21 expected. This is down from the even healthier 25 in May, but with summer seasonality baked into New York State production numbers, we consider north of 22 to be consistent with our overall positive economic outlook.