April 25, 2017

Stocks opened higher again this morning as traders digested earnings announcements. The Dow is currently up 230 pts and the SPX is up .57%. The Nasdaq rose over the 6,000 mark for the first time ever as Microsoft, Alphabet, Amazon, and Facebook continue to make new highs. In terms of major market sectors, materials and financials are leading the way, up 1% in early trading. The VIX Index sank back down under 11. European markets are poised to close slightly higher. Commodities are mostly higher but WTI crude oil is fading to around $49/barrel. There is clear support at $47/barrel. Bonds are falling in price for the second consecutive day. The 5-year Treasury yield is back up to 1.84% and the 10-year yield is at 2.31%. 

One of the biggest takeaways from first quarter earnings season—which isn’t even halfway through—is that Wall Street analysts are going to have to start raising their earnings estimates for 2017. Today, 3M (MMM) raised its 2017 earnings per share guidance to a range of $8.70 - $9.05, compared with Wall Street’s consensus forecast of $8.64. McDonald’s (MCD) first quarter earnings beat the consensus forecast by 10%. And the company’s US same-store-sales rose 1.7%  vs. Wall Street’s consensus expectation for a .7% decline. Yesterday, Illinois Tool Works (ITW) posted a much better than expected quarter and said sales in Europe were up 6% with broad-based improvement in autos, manufacturing, and test & measurement. The CEO noted a pick-up in business spending globally. DuPont (DD) reported earnings per share 18% higher than analysts’ consensus forecast. The company cited improving sales volumes and higher prices. Caterpillar (CAT) absolutely blew away the numbers with earnings per share more than 100% higher than Wall Street was anticipating.  

New home sales surged 5.8% in March to an annualized rate of 621,000 units. That puts new home sales at its highest pace since July. In addition, significant positive revisions to prior months make it clear the housing market is still advancing. Bloomberg says demand continues to outpace supply in the US. And home prices are clearly responding to that. In February, the FHFA House Price Index accelerated to 6.4% y/y growth. 

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