The stock market's major averages are flirting with new highs. Trading was somewhat timid today as investors wait for earnings from two high-profile companies. Intel (INTC), one of the world's biggest semiconductor manufacturer, and J.P.Morgan Chase (JPM), one of the world's largest banks. Earnings results from both companies could have a big impact on their sectors and the market itself.
Investors are looking for confirmation that business is improving. They want to see stronger sales, not just cost cutting. Bears complain that the market has gotten ahead of itself. Better than expected earnings numbers might assuage those fears (a little).
Wall Street was expecting INTC to report a profit of $0.30 a share. It appears the company beat estimates by 10 cents. Revenues surged 28.5% to $10.57 billion, well above analysts' estimates. Gross margins hit 65%, which was also better than expected. All in all it was a very positive earnings report. While shares of INTC are higher after hours they're not that much higher as it was widely expected that INTC would beat the numbers. The bigger impact will be on the rest of the tech sector, which should be boosted by Intel's positive results.
Bears could suffer a double whammy if JPM also blows away the earnings estimates. Wall Street is looking for JPM to earn $0.61 a share. I would bet on JPM beating those estimates and giving the banking sector a lift.
Friday morning is shaping up to be bullish. It wouldn't surprise me to see stocks gap open higher. My concern is that investors could actually sell into strength like they did with Alcoa. Of course Alcoa missed earnings back on Monday but it probably didn't matter as investors rushed to sell the news following Alcoa's run up. I'm not adding new plays tonight. If stocks do gap higher it will be tough on your entry points. What I'm watching is how the market closes on Friday.