When it rains, it pours. And we'll see how that bodes for the market as Wall Street is deluged with second-quarter earnings reports today, led by five Dow components during the day and culminating with results from Apple after the closing bell.
Here's a look at what investors will be reacting to during tomorrow's very busy trading session:
Caterpillar (NYSE: CAT, $36.65) reports early and is expected to post earnings of about 22 cents a share, a sharp decline from the $1.74 in the year-ago period. Barring a major surprise, investors seem to have begun to price in the possibility for good news, especially after Merrill Lynch's "buy" recommendation late last week. Shares are up +15% in the past five days but are still down about 18% for 2009.
Fellow Dow component E.I. DuPont de Nemours & Co. (NYSE: DD, $28.33) is expected to report 2Q EPS of 53 cents a share, down -50% from last year. The economic slump hurt the housing and auto sectors, both big sources of revenue for the chemical company. Shares are up +12% for the year. The bright spot going forward may be agriculture.
Schering-Plough (NYSE: SGP, $25.57) will show its cards from the second quarter before the market opens. The drug maker is expected to earn 45 cents a share, in line with results from a year ago. SGP shares are up +50.1% for the year. Its larger competitor, Merck (NYSE: MRK, $27.94), will also issue its earnings, which are expected to come in at 77 cents, somewhat below last year's 86 cents per share. But Merck -- whose shares are negative for the year -- could well surprise the Street -- as it has in eight of the past nine quarters.
The Coca-Cola Company (NYSE: KO, $51.03) is expected to announce results of about 89 cents a share for the second quarter, a -12% drop from its results a year ago. Coke has been trying to bolster its overseas business to make up for falling consumer spending here at home. The world's No. 1 beverage maker, worth $118 billion, has seen its stock handily beat the S&P this year, gaining 12% year to date.
United Technologies (NYSE: UTX, $54.97) outperformed its index a day ahead of its second-quarter earnings releases, adding 2.2% to the Dow's 1.2% advance. UTX is expected to turn in $1.05 a share, down from $1.38 a year before. The maker of elevators and escalators, among other things, has seen mostly flat performance this year.
Financial companies will turn in results tomorrow include Comerica, Hudson City Bancorp, the pawn broker First Cash and asset manager State Street. Comerica (NYSE: CMA, $22.82) is forecast to report a loss of 36 cents a share, a gut-wrenching reversal of last year's 60-cent-a-share profit. Lower net interest margins will affect results, one of the reasons Fitch downgraded CMA's debt and said its outlook was "negative." Hudson City (Nasdaq: HCBK, $14.61) is expected to see slightly increased earnings of 25 cents a share. First Cash (Nasdaq: FCFS, $16.86), whose shares have declined -11.6% for the year on fears a bill before Congress would restrict the industry, is expected to surpass year-ago results by 40% for a 30-cent-a-share profit as Americans seek credit wherever they can fine it. Asset manager State Street (NYSE: STT, $48.81) is expected to see a -37.8% drop in earnings.
The nation's leading health-care insurer, United Health Group (NYSE: UNH, $24.84), whose shares have underperformed the S&P as investors wonder where the debate about health care will go, is expected to report earnings of 70 cents a share, a slight improvement from last year's 67 cents.
Search giant Yahoo (Nasdaq: YHOO, $17.01) is expected to report earnings of 8 cents a share, a -20% drop from a year ago. Since becoming CEO, Carol Bartz has been cleaning house: She's cut more than 700 jobs -- more than 5% of the workforce -- and industry watchers say she's prepping the company for a Carl Icahn-supported deal with Microsoft (Nasdaq: MSFT), which founder Jerry Yang mucked up last year. Shares are up +39% since Jan. 1.
Continental Airlines (NYSE: CAL, $10.20) is expected to report a second quarter loss of -$1.35 a share, more than four times the 25-cent loss from a year ago. The airline unexpectedly announced last week that CEO Larry Kellner is leaving after 14 years at the company. Shares are down more than -42% for the year. United Airlines parent UAL Corp. (Nasdaq: UAUA, $3.51) is also forecast to report a loss, of -$2.66 a share, about twice what the company bled last year. UAL shares have fallen -70.4% so far this year. Both United and Continental's losses aren't hard to explain: It's the economy, stupid. That makes Southwest Airlines Co. (NYSE: LUV, $7.30) look pretty smart. The Dallas-based discount airline is expected to post a profit of 7 cents a share, a -56% drop form a year ago but still in the plus column.
Newspaper publisher McClatchy (NYSE: MNI, $0.54) has been having a rough quarter, along with the rest of the newspaper industry. The publisher of the Miami Herald, Kansas City Star and Charlotte Observer still puts out decent papers -- they're just not making any money. The whole company is worth less than $50 million -- a tiny fraction of the $4.5 billion it paid for Knight-Ridder in 2006. McClatchy is expected to report a loss of 8 cents a share, a reversal of last year's profit of 18 cents per share.
Apple (Nasdaq: AAPL, $153.35) shares are up nearly +80% for 2009. The House of Jobs released a faster iPhone during its fiscal third quarter, let music labels decide how much to charge for songs and may have sold enough Macs -- 2.6 million -- to tie or break the record. But the biggest news was Steve Jobs' health-leave homecoming, during which the founder and CEO had a liver transplant. Apple is expected to post third-quarter earnings of $1.18 a share, in line with last year. Downturn? What downturn?
Apple may not be able to soar much higher. Stay away from McClatchy. Among the best bets for long-term investors: Caterpillar, Merck and United Health Care.