ETF Trends
ETF Trends

U.S. stocks and exchange traded funds (ETFs) have an upbeat outlook as optimism is injected into investors as big-name companies continue to outperform Wall Street.

Federal Reserve Chairman Ben Bernanke addressed Congress and Wall Street and assured them that the U.S. central bank will be able to keep inflation down when the economic recovery is more firmly rooted.  He said that when it comes time to soak up the money from its stimulus plans, the Fed could raise the rates it pays banks on reserve balances held at the central bank, making it more attractive to keep money parked there or could drain money from the financial system by selling its securities from its portfolio with an agreement to buy them back at a later date or it can sell securities outright.  Regardless of which path is taken, an exit strategy is in the works.

A slew of earnings came forward today:

  • Heavy equipment maker Caterpillar (CAT) reported a decline in second-quarter profits by 66% on a weakened global economy and commodity prices.  The Dow component reported earnings of $0.60/share smashing Wall Street’s expectations of $0.22/year.  CAT also increased its earnings expectations for the remainder of the year.
  • The largest U.S. chemical maker DuPont (DD) topped analysts’ expectations by reporting earnings of $0.61/share, 15% higher than the $0.53/share expected by analysts.  The company has implemented major cost-cutting measures which are leading to profitability.
  • Coca-Cola (KO) stated that its sales fell because of a stronger dollar, but was still able to post a 43% increase in second-quarter profits, thanks to rapid overseas growth.
  • Drug maker Merck (MRK) posted a 12% drop in profits on lower sales of its cholesterol drugs and various vaccines.  However, the company was still able to beat Wall Street’s expectations of $0.77/share by reporting earnings excluding one-time charges of $0.83/share.
  • Additionally, UnitedHealth Group (UHG) reported earnings of $0.73/share, beating analysts’  expectations of $0.70/share and boosted its annual outlook.  The news sent the Health Care Select Sector SPDR (XLV) up nearly 1% in morning trading; MRK is 5.2% and UHG is 2.7%.

It appears that problems for lender CIT Group (CIT) continue to plague the company.  Second-quarter earnings are expected to come in at a loss of $1.5 billion, in addition to possibly still being in the verge of filing for bankruptcy despite securing $3 billion in emergency funds.

Overall, the markets were mixed on today’s heavy earnings session.  The Dow Jones Industrial Average gained 0.7%, the S&P 500 gained 0.2% and the Nasdaq dropped 0.1% in morning trading.

For more stories on health care, visit our health care category.

Kevin Grewal contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.