Yahoo Finance The stock market just needs ‘in-line’ earnings to stay afloat: trader
The bar is low for the current third quarter earnings season, according to one expert.
“Coming into this [earnings] season, the bar isn’t set very high as far as what analysts’ expectations are, so as long as earnings come in in-line, the market is going to be okay with it,” said Jonathan Corpina, senior managing partner at Meridian Equity Partners, based on the floor of the New York Stock Exchange.
Corpina doesn’t think better-than-expected earnings are going to shift the market higher and break it out of the narrow trading range it has been in since early May. As of now, the S&P 500 (^GSPC), which currently stands above the important 3,000 mark, is still roughly 0.5% away from its record high from late July.
“What we could see is if things really, really miss — and outlook is bad in some reports — that could shift the market lower. But we haven’t seen that quite yet,” Corpina said.
Aside from earnings, Corpina thinks issues like Brexit, interest rates and tariffs are set to continue to move markets in the near-term.
Interest rates vs. stocks
Still, as the market tries to revisit the aforementioned late July record highs, Corpina points out, that at that time, the 10-year yield (^TNX) was above 2%. Now, the yield is firmly below 2%. Lower interest rates typically make stocks more attractive, but a lower 10-year yield also suggests more investors are doubling down on bonds, a safe-haven asset. Investors tend to buy bonds during times of caution. Yields and bond prices move in opposite directions.
The failure for the 10-year yield to rebound back to its mid-summer level, even though the stock market has largely rebounded, could be another headwind for the market going forward, Corpina said. “It could easily shift this market — from having a good [fourth] quarter to a bad quarter,” he added.
Visa (V), Intel (INTC) and Amazon (AMZN) are set to report earnings after the market closes Thursday.
Scott Gamm is a reporter at Yahoo Finance. Follow him on Twitter @ScottGamm.
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