While more than 80% of S&P 500 companies beat their earnings estimates this earnings season, the average one-day performance on report days for these stocks was -0.04%. Below we provide a list of the 25 best and worst performing S&P 500 stocks on their report days this earnings season.

As shown, Amazon.com (AMZN) did the best on its earnings report with a huge gain of 26.8%. The New York Times (NYT) was the second best performer with a gain of 22.51%. Other notables on the list of big winners include Motorola (MOT), SanDisk (SNDK), and Ford (F). With such positive reactions to their Q3 earnings reports, these names will definitely be on traders' watchlists during the off-season.

Just when it looked like the prophecies of Nostradamus may be coming true, a white knight, in the form of Warren Buffett, strode in and saved the day. Buffett’s buy of Burlington Northern (BNI) turned the US equities markets from ugly duckling to suave Prince.

The purchase was hailed by the Oracle himself as a “bet on America”. We see it a little bit differently…it is a bet on Asia/China.

The S&P 500 is now down about 5% since October 19th, and the index is trading below its 50-day moving average. Below we highlight the stocks in the S&P 500 that are trading the furthest above and below their 50-day moving averages. For those expecting a bounce from oversold levels, the names that have moved well below their 50-days might be good plays. Stocks that remain above their 50-days have held up well in the face of a struggling market, so they have the best relative strength in the index.

As shown, MBI is the furthest below its 50-day at -37%. MBI is followed by MI, PCS, EK, WFR, AKS, and S. Amazon.com (AMZN) is the furthest above its 50-day at 28%. AMZN is trailed by EL, LXK, AKAM, and HRS.

“The year to date final statistics through August 2009 showed steel imports of 9.6 million metric tons compared to 19.4 million metric tons through August 2008.”

U.S. Steel (X), PPG (PPG), Exxon Mobil (XOM), Transocean (RIG)

Q3 2009 Earnings Call

October 27, 2009 14:00 a.m. ET

Weak volumes and prices drive losses

United States Steel Corporation (X) recorded its third sequential loss -- $3.03 billion or $2.11 per share in the third quarter of 2009 in contrast to a net income of $9.19 billion or $7.79 per share in the third quarter of 2008. However, losses narrowed sequentially and were lower than the Zacks Consensus Estimate of a loss of $2.91.

Oct 27, 2009

• NYSE up 15.03 (0.22%) to 6,975.12.
• DJIA up 59.55 (0.60%) to 9,927.51.
• S&P 500 up 2.31 (0.22%) to 1,069.26.
• Nasdaq down 10.28 (0.48%) to 2,131.57.

GLOBAL SENTIMENT

Sentiment

The S&P 500 is flat late-Tuesday following a round of mixed earnings news. Some of the energy-related names, including Dow components Exxon Mobile (XOM) and Chevron (CVX), are seeing gains after BP reported earnings that beat Street estimates and crude oil gained 74 cents to $79.42 a barrel. The Dow Jones Industrial Average is up 40 points heading into the final hour of trading.

However, the tech-heavy NASDAQ is down 20 points after Chinese Internet company Baidu.com (BIDU) fell on earnings news. BIDU is down $52.33 to $380.64 in late-day action.

Amazon (AMZN), Wellpoint (WLP), Humana (HUM), United Health (UNH), Nucor (NUE), Walmart (WMT), U.S. Steel (X)

• Goldman defends dark pools, status quo. In a letter to the SEC (.pdf), Goldman Sachs (GS) dispelled five common myths about so-called 'dark pool' anonymous trading exchanges, saying the venues benefit both institutional and retail traders by reducing transaction costs and increasing competition. The rest of the 56-page document - which summarizes a Sept. 24 SEC/Goldman gettogether - sheds light on industry practices of short selling, high-frequency trading, flash trading and naked access, which have come under varying levels of criticism in recent months.
• India begins exit. With inflation pressures building, the Reserve Bank of India took the first step toward withdrawing its record fiscal stimulus by ordering lenders to keep more cash in government bonds. "It may be appropriate to sequence the 'exit' in a calibrated way," governor Duvvuri Subbarao said today after boosting the liquidity ratio to 25% from 24%. BofI kept its benchmark rates unchanged, and maintained its 6% GDP growth forecast. "We will start to see G-20 economies exiting now, starting with the emerging ones and then the advanced countries," economist Mridul Saggar said. India's BSE Sensex was down 2.3% amid a broad Asia pullback. (ETF: INP)
• New IRS group targets ultra-rich. A new IRS unit will target the ultra-wealthy by helping decode partnerships, offshore trusts and other complex techniques used to hide earnings. Speaking to an accountants' trade group Monday, IRS commissioner Doug Shulman said the new Global High Wealth Industry group will begin its first audits next month, honing in on individuals with assets or income in the tens of millions - for whom, he said, you cannot assess compliance "by looking only at their 1040s."
• Gross sees weaker U.S., pressure on Treasurys. Influential bond manager Bill Gross warned Monday that an end to the Fed's debt buyback schemes could add selling pressure to several credit markets, including U.S. Treasurys. Gross also said he believes emerging economies will grow faster than the U.S.: "The emerging world, whether it's in Asia, Australia or other associated countries, will do much better from the standpoint of growth, and that's where money should eventually move to. It moves there because of higher profits and it moves there actually because of higher real interest rates."
• China predicts more growth ahead. China reported a 190% jump in overseas investment (to $20.5B in Q3), and forecast industrial production would rise 16% in Q4 after a 13.9% gain in Q3. Analysts say Beijing may be encouraging Chinese companies to invest abroad to ease upward pressure on the yen. Last week, China reported an 8.9% gain in Q3 GDP, leading to speculation about an imminent exit from its super-loose monetary stance. This morning, Morgan Stanley's Stephen Roach said investors are wrong to bet on China reining things in: "The Chinese really are fixated on one thing and one thing alone which is social stability - they don’t want to take a risk of another negative growth surprise." (ETFs: FXI, PGJ)
• Japan's Fujii criticizes BOJ. Japan's finance minister lashed out at its central bank Tuesday, calling its view of the economy too rosy and narrowly informed. "The BOJ has repeatedly said the economy is getting better, but they are dealing with different people," Hirohisa Fujii said at a meeting. The BOJ has a developed a reputation of allowing its jawboning to push it to act in a contrary way just to demonstrate its independence. (ETF: EWJ)
• UBS hires McCann to rebuild Americas unit. UBS (UBS) named Robert McCann - former chief of Merrill Lynch's brokerage unit - to head its Americas wealth management businesses. UBS has been hurt by a tax dispute with the U.S. government, not to mention bad bets on auction-rate securities, writedowns, and capital outflows. McCann dispelled rumors the unit may be up for sale: "I had to go to court against two of my former employers to be able to work with UBS. I would have not done that if the whole goal was to sell the company." Analysts say the unit remains 'strategically challenged,' and are skeptical a new helmsman can combat the negative implications of UBS's loss of its status as banker to the ultra-secretive.
• Utex leads bidders for GE Security. Sources say United Technologies (UTX) has emerged as the frontrunner for GE's (GE) fire alarm and surveillance systems unit, which it put on the block earlier this year. A deal would bolster United's strategy of locking in revenue streams by offering multi-year service contracts for equipment and systems in commercial buildings. GE is thought to want about $2B for the unit.
• EU approves Pepsi bottlers merger. PepsiCo (PEP) received the European Commission's blessings for its $7.8B deal to buy Pepsi Bottling Group (PBG) Tuesday, despite some overlap in their businesses. "The proposed transaction would not significantly change the market structure. Consequently, the Commission concluded that the transaction would not raise competition concerns," it said.
• Europe lending dries up. Euro zone private-sector loans fell 0.3% from a year ago, the first contraction on record, but economists said a slight rise in month-over-month lending was a sign credit in the area was slowly beginning to flow again. "The year-on-year fall is going to catch everyone's imaginations, but that's a lagging indicator of what's been going on," Fortis's Nick Kounis said. Loans to households rose by €14B from August, the fifth sequential increase.
• Data point to bumpy recovery. Regional reports Monday suggested the economy is approaching levels associated with the end of recession, but isn't exactly surging to new highs. Chicago Fed's national activity index (.pdf) fell to -0.81 from -0.65 in August, with production/income making the only positive contribution. Still, the index's three-month moving average makes quite a strong case for a V-shaped recovery. Dallas Fed said Texas-area factory activity declined, and its production index moved into negative ground after leveling the month before. The Chicago Fed's manufacturing index (.pdf) rose 1% to 82.3, but remains 15.7% lower than a year ago.

Earnings: Tue. Before Open

• ACGO Corp. (AGCO): Q3 EPS of $0.13 beats by $0.09. Revenue of $1.4B (-32.7%) in-line. (PR)
• AK Steel (AKS): Q3 EPS of $0.06 beats by $0.05. Revenue of $1.04B (-51.7%) in-line. Shares +1.1% premarket. (PR)
• Avery Dennison (AVY): Q3 EPS of $0.82 beats by $0.25. Revenue of $1.55B (-10.2%) vs. $1.47B. "While the rate of volume decline in the third quarter improved compared with the first half of the year, this was largely due to a slowdown in inventory reductions. Our end-markets remain soft, and we continue to be cautious about the pace of their recovery." (PR)
• BE Aerospace (BEAV): Q3 EPS of $0.36 beats by $0.04. Revenue of $460M (-21.8%) in-line. Expects a substantial increase in earnings and revenue in 2011. (PR)
• Boyd Gaming (BYD): Q3 EPS of $0.09 misses by $0.01. Revenue of $398M (-6.6%) vs. $411M. "While visitation levels remained fairly constant, spend per visitor continues to be down significantly year-over-year, as consumers are still being cautious with their spending." (PR)
• BP (BP): Q3 earnings of $4.67B (-47%) vs. consensus of $3.25B. Sees 2009 costs down by $4B vs. a previous $3B. Total production +6.9%. Shares +5% premarket. (PR)
• Canadian Pacific Railway (CP): Q3 EPS of $0.85 beats by $0.07. Revenue of $1.09B (-14%) in-line. (PR)
• Celanese (CE): Q3 EPS of $0.58 beats by $0.15. Revenue of $1.3B (-28.5%) in-line. (PR)
• CommScope (CTV): Q3 EPS of $0.61 beats by $0.05. Revenue of $750M (-29.4%) vs. $784M. (PR)
• Convergys (CVG): Q3 EPS of $0.27 beats by $0.04. Revenue of $765M (+13.2%) vs. $653M. (PR)
• Corn Products International (CPO): Q3 EPS of $0.70 beats by $0.07. Revenue of $971M (-10.5%) vs. $983M. (PR)
• EarthLink (ELNK): Q3 EPS of $0.28 beats by $0.03. Revenue of $174M (-24.4%) in-line. Net subscriber losses of 146K, down from 149K in Q2 and 275K a year ago. Shares +3.8% premarket. (PR)
• Del Monte (FDP): Q3 EPS of $0.61 beats by $0.24. Revenue of $766M vs. $819M. (PR)
• FirstEnergy (FE): Q3 EPS of $1.11 beats by $0.06. Revenue of $3.4B (-12.8%) vs. $2.96B. (PR)
• FPL Group (FPL): Q3 EPS of $1.38 misses by $0.03. Revenue of $4.47B vs. $4.96B. Shares -3.1% premarket. (PR)
• Honda (HMC): FQ2 profit of ¥54B (-56%) beats consensus by ¥11B. U.S. vehicle sales -25% to 300K. Sees full-year net income of ¥155B, almost triple its previous forecast, and global sales of 3.4M, up 3.2%. (Bloomberg)
• Hospira (HSP): Q3 EPS of $0.90 beats by $0.21. Revenue of $1.01B (+8.9%) vs. $0.94B. Shares +3.7% premarket. (PR)
• IAC/InterActiveCorp (IACI): Q3 EPS of $0.34 beats by $0.21. Revenue of $337M (-8.9%) in-line. Shares +1.3% premarket. (PR)
• Iconix Brand Group (ICON): Q3 EPS of $0.31 beats by $0.03. Revenue of $59.4M (+7.7%) vs. $53.9M. Shares -1.3% premarket. (PR)
• Johnson Controls (JCI): FQ4 EPS of $0.52 beats by $0.01. Revenue of $7.87B (-15.5%) in-line. (PR)
• L-3 Communications (LLL): Q3 EPS of $2.12 beats by $0.27. Revenue of $3.84B (+4.9%) in-line. (PR)
• Life Technologies (LIFE): Q3 EPS of $0.73 beats by $0.11. Revenue of $805M (+2.7%) vs. $791M. Shares +4.1% premarket. (PR)
• Sonic Automotive (SAH): Q3 EPS of $0.21 misses by $0.03. Revenue of $1.52B (-5.9%) in-line. (PR)
• TD Ameritrade (AMTD): Q3 EPS of $0.26 beats by $0.04. Revenue of $658M (+1.3%) vs. $630M. Avg. client trades +35% to 411K/day. Used 70% of net income to buy back shares at average of $11.94/share. Shares +1.4% premarket. (PR)
• Textron (TXT): Q3 EPS of $0.12 vs. consensus of -$0.03. Revenue of $2.55B (-26.6%) in-line. Sees full-year EPS of $0.33-0.63 vs. consensus of -$0.06. (PR)
• Under Armour (UA): Q3 EPS of $0.52 beats by $0.08. Revenue of $270M (+16.2%) vs. $250M. Shares +1.6% premarket. (PR)
• United States Steel (X): Q3 EPS of -$2.11 beats by $0.76. Revenue of $2.82B (-61.5%) vs. $2.72B. Shipment volumes and operating rates increased significantly from the very low levels of Q2. Remains cautious in its outlook for end-user demand, as customer order rates have decreased from Q3. Shares +4.4% premarket. (PR)
• Valero (VLO): Q3 EPS of -$0.39 misses by $0.06. Revenue of $19.5B (-45.8%) vs. $18.8B. Refining margins continued to suffer from a combination of weak demand for refined products and high inventories. Shares +0.6% premarket. (PR)
• Wynn Resorts (WYNN): Q3 EPS of $0.33 beats by $0.18. Revenue of $773M vs. $743M. Shares +1.9% premarket. (PR)

Earnings: Mon. After Close

• Arris Group (ARRS): Q3 EPS of $0.25 beats by $0.01. Revenue of $276M (-7%) vs. $274M. Shares +0.7% AH. (PR)
• Baidu.com (BIDU): Q3 EPS of $2.16 beats by $0.35. Revenue of $187M (+39%) vs. $188M. Sees Q4 revenue of $174M-180M vs. $203M. Shares -13.1% AH. (PR)
• Cabot Oil & Gas (COG): Q3 EPS of $0.41 beats by $0.05. Revenue of $207M (-15%) vs. $205M. (PR)
• DryShips (DRYS): Q3 adjusted EPS of $0.27 beats by $0.07. Revenue of $228M (-30%) vs. $210M. Shares -0.3% AH. (PR)
• Flextronics International (FLEX): FQ2 EPS of $0.13 beats by $0.04. Revenue of $5.8B (+1%) in-line. Sees Q3 EPS of $0.14-0.16 vs. $0.13. Shares +2.7% AH. (PR)
• Health Management Associates (HMA): Q3 EPS of $0.10 beats by $0.01. Revenue of $1.1B (+6%) in-line. Shares -1.1% AH. (PR)
• Masco (MAS): Q3 EPS of $0.08 misses by $0.01. Revenue of $2.1B (-17%) vs. $2B. Sees full-year adjusted EPS of $0.12-0.22 vs. $0.07. Shares -0.1% AH. (PR)
• Plum Creek Timber (PCL): Q3 EPS of $0.12 beats by $0.04. Revenue of $294M (-29%) vs. $274M. Sees Q4 EPS of $0.12-0.17 vs. $0.12, and full-year EPS of $1.39-1.44 vs. $1.35. Shares +0.6% AH. (PR)
• SL Green Realty (SLG): Q3 EPS of $0.98 in-line. Revenue of $250M (-7%) vs. $224M. (PR)
• Vertex Pharmaceuticals (VRTX): Q3 EPS of -$0.71 beats by $0.10. Revenue of $25M (-21%) vs. $30M. (PR)
• VF Corp. (VFC): Q3 EPS of $1.94 misses by $0.01. Revenue of $2B (-5%) in-line. Shares -7% AH. (PR)

Today's Markets

Asia's markets dropped strongly on Tuesday, but Europe is above breakeven at midday, and futures are flat after a U.S. pullback Monday.

In my latest two blog posts Monday and Wednesday, I listed some stocks which I would be willing to go long by selling the puts right before the stock reported earnings. Keep in mind these are companies which I believed would have a positive reaction to the earnings, however if the stock moved sideways on the number this strategy would still likely return a gain the following day. This is because I am taking advantage of the increased levels of implied volatility factored into the option premium before earnings. If you missed them, be sure to check out Monday's blog post here, and Wednesday's here. So far this earnings season, the overall results have been very positive, even on eBay (EBAY), which sold off nearly 10% after earnings; I was able to purchase back the puts options (closed the position) for a $4 per contract gain the following day. The best results are of course when has a very positive reaction to the report and pops. My best trades so far this earnings season include the trades indicated in the two previous blog posts on the following companies:

• Google (GOOG)
• Apple (AAPL)
• Caterpillar (CAT)
• Texas Instruments (TXN)
• SanDisk (SNDK)
• Walter Energy (WLT)
• Yahoo! (YHOO)
• Amazon (AMZN)
• Microsoft (MSFT)

The put options sold on the stocks above were quickly closed within 2 hours after market open following the earnings report (some for as low as $1 per option contract). In most of the cases, the call options purchased were also sold the following day, but I continue to hold both the Google and Apple call options. In this post, I will lay out some trades for Tuesday and Wednesday (October: 27 and 28).

More companies are set to report earnings next week than this week, but the big names have already come and gone.

There are a lot of second-tier reports to focus on next week, however, and below we provide a list of the names that investors will be following most. As shown, Corning (GLW) and Verizon (VZ) kick off the week with reports on Monday morning, while Baidu (BIDU) will surely be active after the close. Johnson Controls (JCI), Under Armour (UA), Valero Energy (VLO), and United States Steel (X) report Tuesday morning, and Visa (V) will give us some important data on consumer spending on Tuesday afternoon. General Dynamics (GD), International Paper (IP), WellPoint (WLP) report Wednesday morning, while there aren't any big hitters reporting Wednesday after the close. On Thursday, we get reports from Chicago Mercantile Exchange Holdings (CME), Eastman Kodak (EK), Motorola (MOT), Newmont Mining (NEM), Office Depot (ODP), Procter and Gamble (PG), Sprint Nextel (S), and Exxon Mobil (XOM), which will be the biggest day of the week for earnings. Finally, Chevron (CVX) finishes off the week with earnings on Friday before the open.

Round numbers can be a tricky thing for markets. On its previous run up, gold hit $1,000/oz. on 2/20 of this year and then retreated, making another near attempt in early June before shying away again. If you include the one day close at 999.50 the day after its latest break though, the yellow metal has now spent 16 days above the 4 figure mark. Like gold the Dow’s initial attempts to get through 10,000 back in 1999 were an advance then retreat sort of movement as investors got used to a DJIA with 5 figures. This latest move through that level has seen the index move back and forth across the line as if it didn’t exist.

So with the S&P nearing the 1100 mark, the Euro touching $1.50/ yesterday in Europe and oil doing the same with the $80/bbl number, three became the charm and the markets took a breather; leaving until today or later to decide if the Fed is going to risk stepping on the paint which it has used to liquify itself into a corner.

Not to be outdone by Maslow, inflation has its own hierarchy of needs. Basic needs (physical survival) correlate to food and energy, safety (comfort) correlates to core inflation, and self-actualization correlates to asset inflation. The Federal Reserve admits that it has little influence on food and energy, believes that it can control core inflation, and says that it has no control over asset inflation.

I believe the Fed’s rhetoric is only partially truthful. I agree that the Fed has little control over the demand for survival needs. However, when it comes to core inflation (the safety teddy) General Electric (GE), Intel (INTC) and US Steel (X) have more influence on the overall price structure than the Fed.

Last week, I noticed media headlines screaming the horrible news that “Crude steel output in 2009 to hit lowest level in 40 years.” As I searched for the direct source of this quote from Japan’s Ministry of Economy, Trade, and Industry (METI), I stumbled upon its “Preliminary Report on Iron and Steel, Non-ferrous metal, and Fabricated metals Products Industry.” From my standpoint, the monthly data shown below clearly demonstrates that steel production likely bottomed in March/April and is in the middle of a rapid recovery (charts copied below). So, yes, when the year is all said and done, the aggregate numbers will look terrible – as will most aggregate economic data – but the current trend seems to suggest that some kind of recovery is in place.

Japanese steel production seems to have bottomed

While I feel bad for Chicagoans and America for losing out on the bid for the 2016 Summer Olympics, I am very excited for Brazil. It is about time South America got the chance to host these games. My one Olympics experience was in Atlanta in 1996. I had a lot of fun back then, but I also saw first hand the economic impact that the Olympics can have on a city. (Unfortunately, I only managed to move to Atlanta nine years later).

The Olympics’s impact on Brazil should bolster the momentum that has already been growing in South America’s economic powerhouse. Brazil’s economic growth has been very uneven, but it has been trending slowly upward for the past ten years. Of course, Brazil did not escape the global recession, but it looks like domestic consumption is picking up, and the unemployment rate is declining. I am doubting there is much risk of a “double dip” for Brazil. I now count Brazil as second to commodities in terms of my investment interest (there is some correlation between the two).

Bullish Calls:

Nucor (NUE): "I prefer Nucor. We've got to get some jobs created... [CEO] Don DiMicco is the only one who really gets it."

Stocks sprinted out of the gate Monday morning euphorically embracing a spate of takeovers, undeterred by strength in the US dollar, or weakness in the Tokyo, Taiwan, and Shanghai stock markets. After closing near the best level of the session (S&P + 1.78%), US equities’ resiliency has finally convinced many unrepentant Bears to throw in the towel, no longer willing to stand in front of the bull market express train.

Xerox (XRX - 14.45%) announced it would pay 6.4 billion to acquire Affiliated Computer Systems (ACS + 14%), Abbott to use cash to buy Solvay’s drug business, and American Securities paid a huge premium to acquire GenTek (GETI + 39.87%). Companies willing to part with large sums of cash to buy businesses in face of lackluster economic prospects and continued high unemployment among consumers, was taken by traders as a very bullish omen for equities.