After a record-high close yesterday, investors are absorbing disappointing earnings news from Boeing (BA)and a strong Q1 performance from Caterpillar (CAT).
S&P 500 Index hit all-time high close yesterday and is near all-time intraday high
Back to the Drawing Board on Earnings? It might be interesting to see if earnings estimates for Q1 start to change in the days ahead after Tuesday’s rush of better-than-expected resuslts from key companies. Of course, there’s a long way to go until the end of earnings season, but we’ll be about 50% of the way there by the end of the week. Upside earnings surprises have seemed like the rule so far, not the exception, in a season when many analysts had predicted a moderate overall decline in year-over-year S&P 500 earnings results. Earnings are down year-over-year, but how much they’ll ultimately fall remains a moving target.
Early this week, FactSet predicted that assuming earnings surprises are at “average levels” this season, overall S&P 500 earnings would be down “slightly” in Q1. But “slightly” is a lot better than a 4% or worse decline that many analysts had predicted before the season started. Hopes that the patient might be among the walking wounded rather than in a hospital bed could help explain the S&P 500 Index’s (SPX) rise to near record highs Tuesday.
Home Brew: Speaking of wounded, that might still be the best description for the U.S. existing home market following downbeat data early this week. The headline number in March fell short of analysts’ expectations even though mortgage rates fell during the month, and might suggest that rising home prices and a lack of affordable homes might be keeping buyers in check, Briefing.com said. The news on March new home sales was far sunnier, though new homes are a much smaller market catering to a generally wealthy group of buyers. New home sales rose 4.5% month-over-month and 3% year-over-year last month.
That might have been helped by the median new home price falling nearly 10%, compared to a nearly 4% rise in existing home prices. New home prices had the smallest margin over existing home prices since last June, and existing home prices have now risen 85 months in a row. Tomorrow brings earnings from home builder D.R. Horton (DHI), and it might be worth listening to what executives have to say about how lower mortgage rates are affecting the market.
Pass the (Healthy) Fries: Trying to eat healthier? It seems like a lot of people are, and U.S. farmers have apparently started to take note. Over the last five years, farmers have devoted more acres to crops like sweet potatoes, romaine lettuce, kale, and spinach, the U.S. Department of Agriculture reported this month. Acreage planted with kale, for instance, rose nearly 150% between 2012 and 2017. Sweet potato acreage grew almost 50%. Losing ground (literally) were crops like sweet corn, peas, and potatoes. The shift might reflect dietary trends, the Washington Post reported. "Why sweet potatoes? White flour, white potatoes and white rice have been vilified over the past decade for their easy digestion and high glycemic load,” The Post said. "Sweet potatoes have fewer carbs and calories, as well as higher levels of vitamins A and C. On upscale menus, they often replace the Idaho russet in fries or tots.” Even fast-food companies like McDonald’s (MCD) are gettng into the act, with MCD now offering sweet potato fries in some countries. MCD reports next week, but it seems doubtful that sweet potatoes will be high on the list of earnings topics.
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