Just call it the "half a loaf is better than none" or "the glass is half-full" earnings quarter, or... well you get the point.Wall Streets' analysts expect earnings growth from S & P 500 companies to slow in the second quarter, but that doesn't mean that there won't be stand-out sectors.
For example, energy companies are expected to benefit from elevated oil prices, barely-adequate gasoline refinery capacity, and solid demand for petroleum-based products.
Also, the industrial and technology sectors are expected to fair well: the industrials boosted by continued strong global growth, the techs aided by corporate information technology spending.
On the downside, likely to post sub-par earnings results include the auto and housing companies: U.S. automakers are battling operational restructuring and a slowdown in consumer spending, while the housing sector continues to correct, due to a large supply of unsold homes, rising interest rates, and subprime loan defaults.
Market-wide, analysts expect S & P 500 companies to post Q2 year-over-year earnings growth of 4.4%, according to Thomson Financial. If that sounds like a modest slowdown compared to the double-digit earnings growth prior to 2007, you're right, and Wall Street has, accordingly, "lowered the earnings expectations bar" for this quarter. Hence, in general, companies that fail to exceed analysts' earnings estimates by 10% are not likely to face as harsh a treatment by investors as they would in quarters past, when the earnings expectations bar was higher.
Still, given the strong correlation between earnings growth and stock prices, lowered expecations or not, this quarter's earnings performance will provide investors with a telling data point regarding whether there's fundamental evidence to drive stock prices higher, and by extension, to continue the market's bull run of 2007.
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
