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Q3 Earnings Season Moving Along

Market indexes this week have had a familiar ring to them, especially when we think back to the first half of this year: there’s a general feeling that economic strength is in the air — if not right now, then forthcoming — giving an inevitably positive air to investing. Yet there’s also an innate self-policing mechanism, whereby market participants are leery of believing too much hype and running markets up too far, too soon. From at least one perspective, we’re back to Goldilocks conditions.

Q3 earnings season moving along stronger than expected — overall, that is; don’t ask the opinion of a big Snap SNAP investor this morning — is part of this equation, but so is the seemingly certain infrastructure bill passing through Capitol Hill, which companies have already penciled-in as accommodating not only shovel-ready jobs across the country, but technology updates in regions yet to experience such things.

For sure, whatever infrastructure “reforms” actually do get passed into law late in 2021 or sometime in 2022 will be far less than advertised, with capitulation hitting the earlier $3.5 trillion budget to look out for corporate industry interest in fossil fuels and high-income Americans. There is also a chance nothing gets passed at all, although politically this would be unsound with midterm elections scheduled for just over a year from now.

More good news these days comes from our advancements against the Covid-19 coronavirus, which a month ago was still threatening to dismantle our economic rebound with the Delta variant, especially in under-vaccinated regions of the U.S. But vaccine mandates in both public and private sectors are having a positive effect, as are developments among vaccine makers. After recommendations about being able to mix and match Covid vaccines as convenient earlier this week, a new Pfizer PFE news item has hit the tape this morning.

While Pfizer and partner BioNTech BNTX still await an FDA ruling until at least an advisory meeting next week, the companies announce 90.7% efficacy among children aged 5-11 in a recent study. This brings the possibility of being able to vaccinate younger kids from Covid earlier than many had previously thought — perhaps as early as the first weeks of November. The study was conducted July through September — when the Delta variant was rampant — and still brought protection to a vast majority of children in the study.

American Express AXP kept the good news coming for the finance sector in this Q3 earnings season, with strong beats on both top and bottom lines reported this morning. Earnings of $2.27 per share routed the $1.78 expected and the $1.30 per share reported in the year-ago quarter, on revenues of $10.93 billion which outpaced estimates by +3.6%. AmEx has been a stellar performer year to date — more than doubling the S&P 500, +46.8% — and is up another +2.8% in today’s pre-market. For more on AXP’s earnings, click here.

Retail brand owner VF Corp. VFC, on the other hand, missed estimates on both earnings and sales for its fiscal Q2 this morning, with $1.11 per share lower by 6 cents from the Zacks consensus and sales of $3.2 billion short of estimates by -8.65%. Both figures were big improvements year over year, but this counts as the Zacks Rank #4 (Sell)-rated company’s second earnings miss in the past four quarters. Shares are also down -13.3% year to date, and down another -3.6% this morning. For more on VFC’s earnings, click here.

After the market opens, we’ll see new PMI data on both Manufacturing and Services for October, with the former expected relatively in-line from the previous month and the latter up 60 basis points. Both metrics are safely above the 50-mark which indicate growth: 60.5 is expected on Manufacturing and 55.5 on Services. Meanwhile, pre-market indexes are running slightly in the red, though set for weekly gains overall as of this hour.

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