As Laura noted last week, the economic data remains mixed. March durable goods were also a big disappointment today at -4.2%. There seems to be a large disconnect right now between the data and the earnings being reported. Out of the 188 companies that have reported so far, 77% have beat the estimates. The S&P 500 earnings growth
rate has
increased from 1.0% to 6.3% over the past two weeks as earnings have been reported. More importantly for investors, 30% of the S&P has increased their dividend during the first four months of 2012. This is the best dividend showing since 2005. Both Spain and the UK have now entered recession territory. This is not surprising given the Eurozone’s effort to deal with its financial and fiscal crisis. The US is still growing despite the continued high unemployment. While sentiment is still negative surrounding US growth prospects, a decent increase in employment could lead to even bigger earnings upside surprises.
