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Wall Street is finally realizing that earnings for the second quarter will be better-than-expected. That’s hardly not to be expected. Earnings have now been better-than-expected for the last twelve quarters. Which leads one to wonder less about the earnings, and more about the expectations. Or perhaps, the expectations of expectations.

Nonetheless, things are looking good. Alcoa was the first major company to report earnings last week. The market liked what it saw, and Alcoa rallied sharply. This week, 24 S&P companies are due to report their earnings results. The biggest increase in earnings estimates is in the energy sector. At the beginning of the second quarter, Wall Street was expecting second-quarter’s energy profits to rise by 13%. Today, it looks like it will be about 33%. But if you take energy out of the equation, the earnings growth for the rest of the S&P 500 is likely to be less than 5%.

Posted by edelfenbein at July 11, 2005 12:18 PM