Markets Set To Digest Earnings

Author: Peter C. Beller

Investors will focus their trading Tuesday on a batch of corporate reports including Apple, Texas Instruments, Coca-Cola and Caterpillar.

Stock markets promise to be active Tuesday as investors digest another big batch of corporate earnings reports with an eye toward companies that can grow sales as the U.S. economy struggles out of recession. Tech favorite Apple once again managed to best expectations with a profit of $1.82 a share, up sharply from last year's $1.26. Wall Street had been expecting $1.42 a share but the maker of gadgets like the iPod and iPhone has beaten analyst predictions two years running. Sales grew 25% from 2008. Shares rose 6.5% in extended trading after the announcement.

Chipmaker Texas Instruments ( TXN - news - people ) also managed to beat expectations late Monday despite falling sales. The firm said it earned 42 cents a share, a penny less than last year but three cents more than analysts had predicted. Sales were off 15%, but investors thought TI was doing pretty well considering the economy, lifting shares by 3.2% after the closing bell.

JDA Software ( JDAS - news - people ) also continued the streak of upbeat results from software companies with a per-share profit of 40 cents. That was two cents less than the same period in 2008 but better than analysts had been looking for. Sales fell 2.5% from a year ago.

Continuing a spell of disappointing earnings from regional banks, Zions Bancorp said it lost $1.41 a share in the third quarter, a reversal of last year's quarterly profit of 31 cents a share. The results were worse than Wall Street had hoped for, as the mid-size lender struggles with a deteriorating portfolio of construction and other commercial loans.

There's plenty more action set for Tuesday morning before trading begins. Among the blue chips, construction equipment maker Caterpillar ( CAT - news - people ) is expected to report that its earnings fell sharply from 2008. Wall Street is looking for profit of six cents a share, down from $1.39 last year as construction around the globe suffered from the effects of the financial crisis and ensuing downturn. On Monday, however, shares of the firm got a boost from analysts at Bank of America ( BAC - news - people ) who raised their targets for the company.

Chemical giant DuPont ( DD - news - people ) also reports, with analysts expecting a drop in profit to 33 cents a share from 56 cents last year. Wall Street thinks soft drink maker Coca-Cola ( KO - news - people ) saw its profit fall only a penny per share from last year. Drug company Pfizer ( PFE - news - people ) and health insurer UnitedHealth ( UNH - news - people ) also announce financial results before the bell.

The coal mining industry comes into focus with its first major earnings report, from Peabody Energy ( BTU - news - people ). Analysts think most coal companies saw profits fall sharply in the third quarter of the year as demand for electricity got hit by the recession. Many power plants burn coal to produce steam and run electrical generators. An exception to the lower numbers might be companies that mine coal used to make steel, which is seeing signs of rising demand.

Real estate-related companies will also take the spotlight with the release of data on home sales and building permits. Economists think construction of new homes rose last month to an annual rate of 610,000 from 598,000 in August. Permits for future homes likely climbed to 600,000. Investors are happy to see building regain some momentum in recent months, along with declining inventories of new properties, but a huge glut of unsold existing homes continues to dog real estate prices across the nation.

Also due for release on Tuesday are wholesale prices from the Labor Department. Inflation indicators have been sending mixed signals with historically small consumer price increases conflicting with a weakening dollar and rising commodity prices. Producer prices, which reflect how much businesses charge for their goods, have wavered between modest gains and losses in recent months. Economists are expecting prices to remain nearly flat overall.