(Repeats column published late on Friday)
By Angela Moon
NEW YORK, July 13 Earnings from some of the
biggest U.S. technology companies will take center stage this
week, giving investors a chance to re-evaluate the sector's
Big tech names set to report results this week include Intel
Corp and Yahoo Inc on Tuesday; eBay Inc
on Wednesday and Google Inc on Thursday.
The tech sector has the highest projected earnings growth
rate among the 10 S&P sectors for the second quarter at 12.3
percent, its best quarter since the first quarter of 2012. This
forecast marks a sharp rebound from a drop of 3.2 percent just a
year ago, according to a Thomson Reuters poll.
Goldman Sachs analysts wrote in a note that the information
technology sector "appears to be the most undervalued sector,"
giving investors more reasons to be bullish on tech stocks.
The implied earnings-per-share growth for the tech sector
has been 5.4 percentage points above the S&P 500 on average over
the past 10 years, but it is now just one percentage point above
the benchmark index, according to the Goldman Sachs note.
While the Dow Jones industrial average and the S&P
500 have hit record highs recently, the tech-heavy Nasdaq
is still more than 700 points away from its all-time
intraday high on March 10, 2000, suggesting to some investors
that the sector may have more room to the upside.
The tech sector's earnings are "going to certainly be
important because the market started to gain momentum as
economic data got better," said Quincy Krosby, market strategist
at Prudential Financial, which is based in Newark, New Jersey.
"We want to hear good solid numbers and if we get that from
tech names, it will help."
Nine of the 13 sub-industries in the tech sector are
expected to report higher earnings than a year ago, with
semiconductors and semiconductor equipment having the highest
growth rates within the sector, according to Thomson Reuters
The Nasdaq is up 5.7 percent for the year, while the
semiconductor index is up 20.3 percent.
BANKS, FED IN FOCUS
Among the 10 S&P 500 sectors, financials have the worst
earnings forecast with a decline of 3.5 percent from a year ago,
according to Thomson Reuters data. Nine of the sector's 21
sub-industries are expected to post a drop in earnings.
Earnings from some of major banks this week will include
JPMorgan Chase & Co and Goldman Sachs Group Inc
on Tuesday, Bank of America Corp on Wednesday, and
Morgan Stanley on Thursday.
Analysts are expecting subdued results because a slowdown in
revenue from mortgage refinancing and trading is offsetting
gains from other areas like investment banking and money
management. Higher legal, regulatory and compliance costs are
also weighing on results.
Wells Fargo & Co on Friday underscored some of those
problems as the largest U.S. mortgage lender reported a 39
percent decline in revenue from that business.
In addition to keeping a close watch on earnings, Wall
Street will tune in this week to what Federal Reserve Chair
Janet Yellen says when she makes a couple of trips to Capitol
Hill. She is scheduled to testify on the U.S. central bank's
monetary policy in a semi-annual appearance before the Senate
Banking Committee on Tuesday and the House Financial Services
Committee on Wednesday.
(Reporting by Angela Moon; Editing by Jan Paschal)