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By Carlos Guillen

After a very encouraging week of trading last week, which was driven mostly by positive Fed comments, equity markets are off to a fairly decent start this week, with the Dow Jones Industrial Average slowly moving into winning territory; however, existing home sales data and earnings results from McDonald's (NYSE:MCD) have served to attenuate further upside as they both came in below the Street's expectations.

Clearly having the most significant negative effect on the Dow today is McDonald's after the world's largest fast-food chain reported second-quarter earnings that fell shy of expectations. The company reported earnings per share of $1.38, two cents below the Street's consensus estimate. Revenues during the quarter did grow from the year-ago level to $7.08 billion, but were also a bit short of meeting the Street's estimate of $7.09 billion; global comparable sales increased 1%, but global comparable sales for July are expected to be relatively flat. Perhaps more concerning was that management said that business during the remainder of the year was expected to remain challenging.

Also somewhat of a disappointment today was that existing-home sales data for June declined 1.2 percent while the Street was expecting a rise of 1.9 percent. Despite its decline, existing-home sales landed at the second-highest level of sales since November 2009, still indicating that the housing sector remains strong (more on this below).

While the rest of this week will not have lots of economic data points to move markets, there will be many companies reporting earnings, and this can certainly shake equity markets. In fact, according to Reuters, 157 companies from the S&P 500 will be delivering financial releases this week. And according to FactSet, 71 percent of companies that have reported earnings so far have beaten the Street's earnings consensus, but just 49% have beaten forecasts for sales. In sum, it is going to be a week full of suspense.

Existing Home Sales
By David Urani

Existing home sales for June came in at a 5.08 million annual rate, down 1.2% from the 5.14 million reported in May; this was also below the 5.27 million consensus estimate. In general, when I see a piece of broad economic data, particularly one that's both seasonally and annually adjusted like existing home sales, then I try not to over-analyze a move of just 1.2%. Nevertheless, the Street is a bit disappointed with the results, as investors apparently wanted to see more growth. Still, one positive way to see it is that in May sales touched above 5 million for the first time since the Federal tax credits in 2009, and in June they stayed above 5 million.

Regionally, the Midwest was flat while the Northeast, South and West were down slightly. Over on the supply side, inventory was up 1.9%, leading to months' supply rising to 5.2 from 5.0, bringing it back to the April level. The average price was up to $261k from $251k.

So far the economics have remained favorable. Of course, it's clear the Street is already skittish about mortgage rates and likes to sell on any whiff of weakness and I think we're seeing a bit of that today. Nevertheless, home demand still is not showing any signs of being hit materially.