A better-than-expected earnings season continues Friday morning with Alphabet (GOOGL) , Intel (INTC) and Starbucks (SBUX) putting up strong numbers. Amazon (AMZN) was a little disappointing, but quickly found some dip buyers.
The Google EPS beat of $2.83 was particularly impressive and the stock is trading up nearly 9% in the early going. Technically, it is into the big gap that was created back in late April, but it has some work to do in order to challenge all-time highs.
The indices are indicated higher this morning, but the question is whether this good news will be sufficient to create sustained momentum. The market has had a generally good tone for the past month, but it hasn't been able to develop much energy. There will be a solid day like we had on Wednesday and then poor action like on Thursday. The bears are unable to kill the uptrend but the bulls are surprisingly sedate for a market that is pushing to new all-time highs. The action is more complacent than euphoric.
The bears have been anticipating a difficult earnings season and so far have been quite wrong. Their pessimistic argument was that even a dovish Fed would not be able to combat the reality of slowing earnings growth. What has happened instead is that the market not only has solid earnings but central banks are rolling out market-friendly policy.
On Thursday, the market had a dovish Mario Draghi of the European Central Bank and a very good earnings report from Facebook (FB) , but reversed and traded poorly most of the day. It was "sell the news" action -- and raises some concern about what this market has already discounted.
On Friday morning, the market is celebrating good earnings again, but we will see if it can build on the early gains. The S&P 500 is looking to open at just about the same level it was at yesterday morning and we'll find out quickly if market players are willing to chase it up to a new all-time high on these earnings reports.
There are still a slew of reports to come, but many of the key names are out of the way and the focus is going to shift to the Fed interest rate decision, which will be announced on Wednesday, July 31. This is a very well-anticipated meeting, with the market expecting a quarter-point cut. The policy statement will be key, but we will have to contemplate how much of this news is already priced into the market.