The Dow Jones Industrial Average (^DJI 0.48%) is on the move this morning as more investors return to the market after an extended Independence Day holiday. With the positive jobs data from Friday, the markets are headed higher as signs of economic growth give investors some optimism as the new earnings season begins today after the closing bell. As of 11:30 a.m. EDT, the Dow is up 78 points, putting it back on track to reach the record highs last seen in May.
Earnings season
Dow component Alcoa (AA) officially kicks off earnings season this evening after the markets close. While the world's largest aluminum producer has been relying heavily on cost-cutting measures to improve its bottom line, there may be a change in what investors are focusing on this earnings season. As the economy continues to recover, new signs of demand will be an important indicator of growth -- so new revenue growth may be the big focus for Alcoa and others as they report second-quarter earnings in the coming weeks.
Some big financials are set to report earnings later in the week, with both JPMorgan (JPM 0.43%) and Wells Fargo (WFC 0.28%) on tap. Both banks were at the top of the mortgage-origination food chain last year, so investors will likely be looking for growth in their mortgage operations. As Wells CFO Tim Sloan already noted, rising interest rates have squashed demand for new refinancing activity, so another key item to watch will be the measures available to the banks to offset the lower fees and income from that arm of the loan operations.
With the report for May's consumer credit levels coming out later this afternoon, investors may get a preview of what the banks and other financial firms report for their credit card operations. American Express (AXP -0.39%) has been enjoying gains following various data releases that report higher consumer spending. And since the company's credit cards are largely directed at higher-income consumers, a demographic that has enjoyed a swifter recovery, the credit card provider will likely report an increase in consumer balances.
Earnings season is an important time for any investor. Information reported during the next few weeks will give you a better sense of how your businesses are managing the volatility of a recovering economy, how they are handling the return of higher interest rates, and if they still meet the criteria you set in your investment thesis. Though it may seem daunting, take the time to study how your individual investments are handling the current challenges and preparing for the ones to come.
