Earnings reports are coming in fast and furious and this, coupled with White House comments about tax reform, drove the Dow higher by 174 points to 20,578 on heavier volume.
According to First Trust Chief Economist and honorary member of the Westport Mafia, Brian Wesbury, earnings reports so far are coming in well ahead of estimates. Of the companies that have reported earnings thus far, the earnings growth rate is running just over 15% from this time last year and this does not include the effects of Starbuck’s new unicorn frappacino. Brian mentions that if this trend holds it will be good for markets despite all the turmoil in headline news.
The largest homebuilder in the US, DR Horton, reported and beat earnings estimates by posting a 17% increase in revenue and a 15% increase in net profits. Orders increased 14% to 13,994 and the company raised its full year forward guidance. CEO Don Horton commented that the spring selling season was going well and that net sales orders increased 52% from the prior quarter.
Verizon reported lower than expected revenue and net income as it grapples with the pending purchase of Yahoo, decreased “overage revenue” and the finalization of XO communications fiber assets. Revenue was off by 7% and net income was lower by 10%. The gurus were bummed and sent shares lower.
Railroader CSX posted better results than the experts had called for and said forward guidance this year should jump 25%. Investors jumped aboard this train sending shares about 5% higher. CSX’s results boosted the entire transportation sector.
In a report that is sure to bring a smile to Tim “the tool man” Taylor’s face, Snap On Tools posted better than expected numbers with a 6% revenue gain and an 11% increase in net profits. Shares were up big on the news.