World Business

About 25% of the S&P 500 companies report results this week, and they’ll show the state of the energy, consumer, and industrial sectors. Here’s which to look for

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by Ben Steverman

The summer’s earnings season has had as many surprises and plot twists as a Hollywood blockbuster, and it’s only halfway through. In the next few days, almost 25% of Standard & Poor’s 500 companies are oppose to unveil their second-quarter results. On top of that, traders will closely watch crucial economic reports (BusinessWeek.com, 7/24/08) on employment, consumer confidence, and the gross home product.

Most major financial companies have already situated results, which accept been carefully scrutinized as the evidence of debt emergency lingers. Companies in other industries still have a chance to impress, reassure, or disappoint investors with their quarterly updates.

According to Thomson Reuters, second-quarter earnings for the Standard & Poor’s 500-stock index are expected to fall 17.9% from a year ago. That’s only slightly worse than analysts had predicted, and much preferable than the past three quarters, when results "sharply deviated" from predictions, says Ashwani Kaul, adviser of examination at Thomson Reuters (TRI).

The next several days will present those predictions to the test. Here are the major stocks to watch:

1. ExxonMobil (XOM)

With a market capitalization of $430 billion, ExxonMobil is the largest concourse in the world, and investors are expecting actual big things while it reports earnings July 31. Analysts are expecting record revenues, from the time of oil prices climbed to new highs in the second quarter. According to analysts polled by Thomson Reuters, sales are expected to total more than $144 billion, a 47% greaten from a year ago, while earnings are expected to rise 14%.

But can ExxonMobil meet the high expectations? Energy shares "have had similar an incredible run," says Michael Yoshikami, president and chief investment strategist at YCMNET Advisors.

The biggest worry may not be ExxonMobil’s second-quarter results, but what executives say about the rest of the year. Crude oil hit a record exceeding $147 per barrel in early July, but oil at this moment trades above $123, a 16% decline. Georges Yared, president of Yared Investment Research, says lower oil prices could take a big bite confused of the profits that investors and analysts are expecting from ExxonMobil in the supporter moiety of the year.

2. Disney (DIS) and Viacom (VIA)

With the price of a gallon of gasoline near $4 nationwide, investors still-house bore about U.S. consumer expenditure. Two large consumer discretionary stocks reporting earnings this week are Viacom without interruption July 29 and Walt Disney Co. on July 30.

Despite worries about a sink in advertising spending, these media companies are still expected to boost profits compared to a year ago. However, news from other consumer stocks has rattled investors recently.

A very divers consumer stock, retailer Costco Wholesale (COST) warned July 23 of lower-than-expected profits, news that sent its shares falling 15% (BusinessWeek.com, 7/24/08). The discounter was person of the small in number retail stocks silent holding up, but its news is "a good indication that the consumer is starting to get squeezed," says Dave Rovelli, thrifty monitor of fairness trading at Canaccord Adams.

Disney, the larger of the two companies, owns a variety of businesses, including composition parks, movie studios, ABC television, ESPN, and radio stations. The company’s diverse properties could help protect it from a downturn.

One positive sign for Disney is evidence that this has been a good summer for movie attendance, says Yoshikami.