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Investing Specialists

Earnings Reports Trump Economic Data

Economic news wasn't a disaster--just a little slower than expectations, which had gotten a bit out of hand.

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United States markets managed a rally this week, their seventh weekly increase in a row, despite economic data that can best be characterized as mixed, as well as negative news that China was raising reserve requirements in yet another attempt to slow inflation.

The apparent cause of the rally appeared to be better-than-expected corporate earnings.  Alcoa (AA) kicked off the week with news that strong aluminum demand and a positive price environment pushed earnings higher than expectations. Tech bellwether  Intel (INTC) also surprised on the upside on the back of accelerating demand from businesses. Then on Friday a positive earnings report from  J.P. Morgan (JPM) turned a lackluster market bullish, despite more disappointing economic data.

The economic news wasn't so much an out-and-out disaster--just a little slower than expectations that had gotten a bit out of hand. Retail sales were healthy but slower than November. Industrial production was fine, but a weather-related boost from utilities saved the day. Even initial claims data that had been improving for weeks moved the wrong way as claims offices worked their way through holiday-related backlogs.

Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.