WALL STREET ON PACE FOR BEST MONTH SINCE NOVEMBER

Will earnings continue to propel stocks as they did last week when major indices posted better-than 3% gains across the board?

Last week, the Dow Jones Industrial Average surged 326.72 points to 10,424 (up 3.24%), the S&P 500 jumped 37.78 points to 1,102 (up 3.55%), and the Nasdaq Composite rallied 90.42 points to 2,269 (up 4.15%).

Earnings overrode all other news and will likely continue to do so over the next few weeks. On Friday, telecom carrier Verizon (VZ) beat on both the top and bottom line while McDonald's (MCD) came up well short of what may have been a whisper number that was too high. A whisper number is the expectation that analysts have immediately before the earnings announcement.  

Tech and discretionary stocks were mixed. Microsoft (MSFT) delivered solid quarterly results, while Amazon (AMZN) and chip-maker SanDisk (SNDK) disappointed.  Ford (F) shifted into top gear, swinging to a profit and upping their outlook.

Big oil delivers earnings this week with Tuesday's focus on BP. Exxon (XOM), Chevron (CVX), and ConocoPhillips (COP) are due up later in the week. Oil bubbled toward $80, powering energy stocks last week. The front-month oil contract closed just below $79 per barrel.

Focusing on positive earnings, investors bypassed more downbeat housing data. Existing home sales dropped 5.1% in June, and overhang increased with supply rising from 8.3 months to 8.9 months. A meaningful recovery in housing could be expected if supply diminished substantially from the current rate, but it is likely that new construction will only push supply up.

The market was range-bound for much of Friday morning ahead of stress test results for European banks. Most major financial institutions in France, Germany, Spain, Finland, and other Euro nations passed their stress tests; just 7 of 91 banks failed, in line with expectations. Stocks pushed higher after the Committee of European Banking Supervisors revealed their findings, despite the fact that the stress tests exclude the probability of sovereign default.
 

Due up this week:
MONDAY - New Home Sales (June), earnings from Coach (COH), Fluor (FLR)
TUESDAY - Consumer Confidence (July), S&P Case-Shiller HPI (May), earnings from BP (BP), DuPont (DD), Aetna (AET), Deutsche Bank (DB)
WEDNESDAY - Durable Goods Orders (June), Oil Inventories (Weekly), MBA Purchase Applications (Weekly), earnings from Boeing (BA), Visa (V), Sprint (S), Comcast (CMCSA), ConocoPhillips (COP)
THURSDAY - Jobless Claims (Weekly), earnings from Exxon (XOM), Motorola (MOT), Kellogg (K), Amgen (AMGN)
FRIDAY - GDP (Q2), Consumer Sentiment (July), Chicago PMI (July), Employment Cost Index (Q2), earnings from Chevron (CVX), Merck (MRK)