Q2 on Wall Street

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TEXT OF STORY

MARK AUSTIN THOMAS: Have you scratched your head trying to figure out the logic of Wall Street? Well it might make you feel better to know you're not alone. Sometimes what seems obvious isn't, like when a company reports high earnings, but the market reacts with a frown instead of a smile. Marketplace's Bob Moon explains why some investors may not be impressed over the next several days, even though earnings may be impressive.


BOB MOON: When Wall Street is clueless, it's a good time to be cautious. So even though analysts are expecting another round of double-digit profit growth for companies in the S&P 500, that may not be what's important.

Seaport Securities broker Ted Weisberg says watch the guidance companies will be offering about future their performance.

TED WEISBERG:"The trick is not the numbers themselves so much, but the words behind the numbers. Stocks after all do trade on looking forward, not necessarily looking back."

Weisberg says investors should brace themselves in the days ahead. Wall Street will be watching each report for even the slightest sign of trouble, given lingering confusion over interest rates and how they might slow down economic growth.

WEISBERG:"The message is not quite so clear, and so it makes reading the tea leaves that much more difficult and so therefore there's maybe a little more volatility, and it's really kind of hard to figure out what the market direction will be."

Most analysts still expect earnings to climb strongly at least for the rest of the year, but investors will be watching to see if the guidance backs that up.

In New York, I'm Bob Moon for Marketplace.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.

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