The Zacks Analyst Blog Highlights: Alcoa, S&P 500 ETF, Accenture, Oracle and FedEx

CHICAGO, July 8, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog includeAlcoa (NYSE:AA-Free Report), S&P 500 ETF (AMEX:SPY-Free Report), Accenture (NYSE:ACN-Free Report), Oracle (Nasdaq:ORCL-Free Report) and FedEx (NYSE:FDX-Free Report).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Friday's Analyst Blog:

Checking the Investment Landscape, Pre-Q2

As the new guy at Zacks, I thought I would introduce myself by providing a few thoughts as we enter the upcoming earnings season for Q2. 

First, I like to get a lay of the land from a historical perspective and examine seasonality.  July has tended to be a positive month for the S&P 500, but the breadth of the gain is not strong.   Going back to 1929, the S&P 500 has posted an average return of 1.48% in July.  Although July has produced the strongest average monthly return of the year, the S&P 500 has risen 48 of 85 months or just 56.5% of the time.   The average return in the 48 up months has been 5.14%, while the average return in the 37 down months has been -3.26%.   A number of other months have produced a higher percentage of positive return.

Second, it might be worth noting how the S&P 500 has historically traded through the Q2 earnings season.  Convention wisdom sees Alcoa (NYSE:AA-Free Report), Zacks Rank 3, as the company which kicks off the season.  It is possible to use the Alcoa earnings event to benchmark the path of  the S&P 500 through earnings season.  The graphic displays a 5, 10, and 15 year average price movement of the S&P 500 ETF (AMEX:SPY-Free Report).  The price of SPY was benchmarked to the close of the day before Alcoa released earnings and examined for 20 trading days after Alcoa's profit release.  The chart indicates the S&P 500 has tended to see price strength early in the Q2 earnings season,  but strength seems to fade as the season progresses. Additionally, the market has performed strongly in the past 5 years relative to the past 15 years.

Third, there is great uncertainty over the pace of economic growth and the outlook for profitability in Q3.  The JPM Global Composite PMI output component fell 1.5 to 51.4 in June and shows the global expansion muddling along.  Emerging economies, which have provided support to global growth, seem to be struggling, Europe continues to fight recession, and the U.S. economy is throwing off mixed signals.  An 80%  non-manufacturing to 20% manufacturing mix of the ISM activity and production components fell almost 3.0 to 52.0 in June – the lowest since July 2009.  However, the economy also created 195,000 jobs in June and payroll growth seems firm.  

Fourth, recent profit releases from Accenture (NYSE:ACN-Free Report), Zacks Rank #3, Oracle (Nasdaq:ORCL-Free Report), Zacks Rank #3 andFedEx (NYSE:FDX-Free Report), Zacks Rank #3, were unable to generate great confidence in the profit outlook, and have probably generated some caution about the strength of Q2 earnings.   Signs of profit strength in early July could allow the market to reduce its focus on QE tapering and Federal Reserve policy.  Vibrant profit growth could also ease nervousness in the trade over the idea that higher interest rates will cap the economic expansion.  

Fifth, investor optimism is mixed going into earnings season. The American Association of Individual Investors poll of sentiment showed the bull index up 11.7 to 42.0 and the bear index down 11.4 to 23.8 in the week ending July 3rd. Individual investors seemed to have turned more constructive on the market.  A pick up in calming words from Federal Reserve members and recent price strength have helped to boost optimism.  However, the CBOE put to call ratio shows less bullish positioning.  The 10 day average was 1.05 through July 3rd and is consistent with a neutral to cautious view toward stocks.   Put volumes have slightly outpaced call volumes.   

Sixth, watch what Alcoa says about end demand for its products.  Autos and aerospace have been strong sectors and were seen growing 1-4% and 9-10% respectively in 2013 at the end of Q1.  Heavy trucks and commercial construction demand was projected up 2-7% and 4-5% respectively in 2013.  A downgrade to these assessments may influence the demand for cyclical shares, and the overall economic outlook.  Likewise, the market will be sensitive to the outlook for China's aluminum demand, which had been projected up 11% in 2013.  Demand for the World excluding China was expected up 4% in Alcoa's Q1 press release.  European and North American aluminum demand was seen down 1% and up 4% respectively in 2013.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros.  In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Get the full Report on AA - FREE

Get the full Report on SPY - FREE

Get the full Report on ACN - FREE

Get the full Report on ORCL - FREE

Get the full Report on FDX - FREE

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
http://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

SOURCE Zacks Investment Research, Inc.