Stocks Modestly Higher on Alcoa’s Earnings

The stock market is just slightly higher this morning. There’s some optimism that a German court will approve the eurozone’s new bailout fund. The bad news is that China’s trade growth plunged in June.

After yesterday’s close, Alcoa ($AA) reported earnings of six cents per share which was one penny ahead of expectations. Since Alcoa is usually the first Dow component to report, its earnings report gets a lot of attention. The problem is that Alcoa is hardly representative of the larger economy.

On Friday, we’ll get a better idea of how earnings season is going when JPMorgan Chase ($JPM) reports earnings. Obviously, we’ll also get an idea of how badly the bank has been shaken by the big trading losses that came from their London office.

Bespoke Investment Group has a chart showing how Wall Street has chopped its earnings expectations for JPM. In May, the Street had been expecting $1.24 for JPM’s second quarter. Today it’s down to 79 cents per share. There have been similar drops from Morgan Stanley, Goldman Sachs and other big Wall Street firms.

I’m hesitant to make any forecasts for JPM’s earnings report because the company has been very tight-lipped about what exactly happened. The key for us will be to see how well the bank’s fundamental business has performed. For the most part, that’s been good this year.

On the Buy List, I see that Reynolds American ($RAI) has matched its 52-week high this morning. Johnson & Johnson ($JNJ) is only a few pennies away from hitting a fresh 52-week high. JNJ is up by more than 10% since its June 1st close. Not many people saw that rally coming.

Posted by on July 10th, 2012 at 10:35 am


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