Investors have been keenly focused on earnings reports this week, hoping to find more concrete signs of life in the economy and validation that a huge rally in stocks this spring was justified. So far, the results have been varied. Strong earnings from four of the largest U.S. banks have been encouraging, but there are still signs that the recession's grip hasn't eased as much as hoped such as higher loan defaults.
BofA, which has struggled more than some of its peers from loan losses, beat Wall Street's estimates just as Goldman Sachs Group Inc. and JPMorgan Chase & Co. did earlier this week. However its profit was down from a year earlier as losses from delinquent loans continued to climb.
Citigroup, another troubled bank, surprised Wall Street with a $3 billion profit instead of the big loss analysts had expected, but results were boosted by the sale of a majority stake in its Smith Barney brokerage.
GE's earnings fell 49 percent on losses at its financial unit and weakness in industrial businesses. The profits topped forecasts, but revenue came in $3 billion below estimates. Those reports followed mixed results from tech giants Google Inc. and IBM Corp. late Thursday.
Google said its second-quarter profit was its biggest since it went public five years ago and several analysts raised earnings and target prices. However, investors were concerned that revenue growth continued to decelerate. It was Google's second straight quarter of single-digit revenue growth. IBM reported revenue below expectations, but its profit continued to improve and the company raised its full-year forecast.
The next big mover I'm eyeing next week is Apple [AAPL] which reports Tuesday.
Below I have the charts of the Financial Spider [XLF] & Materials Spider [XLB].
*click chart to expand image
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