The consensus of an improving housing market has gained more credence as data released this morning shows new home starts increased 6.9% in June from the revised May estimate of 711,000. Right now any growth is good growth, unfortunately the only confirmation out of Ben Bernanke during his two-day testimony is of anemic economic growth and slow progress toward alleviating unemployment. The Fed chairman does not see the United States entering a double-dip recession, but with GDP growth expectations under 2%, the markets cannot take much comfort in the prediction.

Fortunately, the markets are up as investors are encouraged by the string of optimistic earnings reports.

Index

Gain/Loss

Gain/Loss %

Dow Jones Industrial Average (INDEX: ^DJI) 73.83 0.58%
S&P 500 5.83 0.43%
Nasdaq 25.27 0.87%
WTI Oil Futures 0.52 0.58%

Source: Yahoo! Finance.

Earnings continue
Intel (Nasdaq: INTC) is leading the Dow pack after releasing second-quarter earnings after the markets closed yesterday. The chip maker lowered its growth forecast for the remainder of 2012 to a range of 3% to 5%. However, Intel is up 3.28% on the day, as analysts expected slower growth out of Intel and the PC industry. The 3% to 5% guidance shows that life still exists in the industry. Dow component Hewlett-Packard (NYSE: HPQ) is up 1.85% on the news.

Bank of America (NYSE: BAC) announced earnings before the markets opened today, with second-quarter profits of $2.1 billion, or $0.19 per share. Although earnings beat analyst estimates, the bank is trading 4.8% lower today after announcing revenue dropped heavily in all of its business lines. Furthermore, with uncertain economic growth, B of A said 2012 could be weaker than originally planned.

Pharmaceutical companies were expected to release sound numbers this earnings season, but that was not the case with Abbott Laboratories (NYSE: ABT), down 0.68%. Earnings declined 11% from the same quarter last year as sales were bogged down by a strengthening dollar. Abbott confirmed its outlook for the year and does not expect this past quarter to derail its campaign.

Long-term outlook
A surprising number of companies are beating estimates so far this quarter, but the unexpected bottom lines are not caused by unanticipated second-quarter growth. The upended numbers are thanks to the extremely low estimates from analysts. Today's good news is not correlated with an improving economy; rather, it shows how negative the economic outlook currently is. With more potential buying opportunities, now would be a great time to check out The Motley Fool's special report: "3 Stocks That Will Help You Retire Rich." This free report will list three remarkable companies as well as offer great advice on how to invest to secure a comfortable retirement. Get your free report now.

Joel South owns shares of no company listed above. The Motley Fool owns shares of Intel, Abbott Laboratories, and Bank of America. Motley Fool newsletter services have recommended buying shares of Intel. The Motley Fool has a disclosure policy.
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