Stocks opened sharply higher today (Dow +125 pts; SPX .5%) on some positive corporate earnings reports. The real estate sector is up over 2% and industrials are up 1.8% in early trading. The only sectors in the red are financials and energy. European markets are poised to close up about .6% to 1%. The VIX Index fell back to 13.3 and VIX August futures are down around 14.3. Commodities are mixed, with WTI crude oil down to $68.80/barrel. Bonds are trading up as yields dip. The 5-year and 10-year Treasury yields are hovering around 2.84% and 2.96%, respectively.
KLA-Tencor (KLAC) reported excellent second quarter results, surprising Wall Street. Revenue rose 14% y/y in the quarter and earnings-per-share shot up over 30%. "We delivered the second highest quarterly bookings result in our history, while setting all-time records in quarterly shipments, revenue, and GAAP and non-GAAP earnings per diluted share.” The stock has been knocked down on trade war fears, but apparently business is good. The stock is up about 11% today.
Pfizer (PFE) also exceeded analysts’ expectations for the quarter, posting its best revenue growth in almost 2 years. Management raised its full-year 2018 earnings guidance to a range of $2.95 - $3.00/share compared with analysts’ current consensus forecast for $2.95. One big reason for this is a lower expected tax rate. However, management also lowered its revenue growth outlook, a direct result of promising the Trump Administration that it would forego planned drug price hikes this year. I’m a little surprised the stock is up 3% today.