- Carmine Grigoli, chief investment strategist at Mizuho Securities
Everyone starting from the ordinary U.S. consumer and up to the Federal Reserve is hoping the second quarter growth will surprise markets to the upside and will be able to offset first quarter's nightmare. While economic indicators are mixed, second quarter's revival will be manifesting itself in the second-quarter earnings, however, the next two weeks can be really stressful.
It seems that corporate earnings reports will have more significant impact on the buck and stocks during next two weeks. The recent profit estimate improved from a July's forecast of 6.2%, while revenue growth now stands at 3.2%, on track to post the most impressive gains since the third quarter. Nonetheless, it is too easy to overestimate the excitement. As usual, financial companies will be reporting first, and they are not always the best barometer of Main Street activity. Despite this, almost 60% of the S&P 500 companies will release their results during next two weeks, and a series of these reports are considered to be a key for investors who are looking for confirmation first quarter's contraction was only a matter of weather. The world's largest economy contracted 2.9% in the January-March period, posting its first weak performance in five years. While the future is unclear, one of the indicators is already pointing at a rebuild- usually pessimistic analysts' expectations, which vast majority of companies still tend to beat.
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