Spotlight on corporate earnings

THE trend of better-than-expected earnings will be put to the test this
week when investors hope Apple can exceed already high expectations for
the tech giant and Facebook reports its first quarterly earnings.

Apple accounts for a significant proportion of the overall earnings of
Standard & Poor's 500 components. S&P 500 earnings are expected
to show a rise of 5.7 per cent in the second quarter from a year ago.
Excluding the maker of the iPad, the rise is 4.8 per cent, according to
Thomson Reuters data.

Apple's results, due tomorrow, could help
stocks build on last week's gains and counter investor worries over the
eurozone crisis. More signs of financial stress in Spain on Friday
caused stocks to give back some of the week's increase. The S&P 500
ended 0.4 per cent higher for the week.

"Apple can drive the
whole (tech) group," said Daniel Morgan, who helps manage about US$3.5
billion (RM11.04 billion) at Synovus Trust Co in Atlanta.


"There's a huge psychological component as it relates
directly to Apple. If they just blast numbers like they did last
quarter, then obviously the perception will be everybody else did
pretty good and Apple did fabulous."

Apple's
expected strong performance is mainly why technology earnings growth
has held up better than other S&P 500 sectors. The expected growth
rate for the sector has gone from 6.9 per cent in April to 8.7 per cent
as of Friday, the data showed.

Apple's earnings for the quarter
are seen at US$10.38 a share, based on Thomson Reuters I/B/E/S, which
includes estimates from 43 analysts. That compares with a profit of
US$7.79 a share for the year-ago quarter.

Morgan said Apple's growth has largely depended on the success of its new products.

"For the stock, to continue its trajectory at the pace it has, it's critical that they release these new products," he said.

Apple's shares are up 49.2 per cent for the year so far.

Investors are likely to be just as keen to hear from Facebook when it
reports on Thursday. Facebook's first results following its market
debut could give investors another chance to indicate how they feel
about the stock since its disappointing initial public offering.

Shares of Facebook, one of the most closely watched IPOs ever, lost
ground after technical problems with its market debut on Nasdaq and as
investors questioned its ability to rapidly boost advertising revenue.

Analysts said an earnings miss by Facebook could be disastrous for the
stock, which closed Friday at US$28.76, below its US$38 offer price.

Investors are looking for executives to address a litany of concerns
about the business, such as the efficacy of its online ads and the
company's nascent efforts in mobile advertising.

Tech results
also will be closely watched for signs of weak demand overseas,
particularly from Europe. Other technology companies expected to report
this week include Texas Instruments and Amazon.com. Of the S&P
sectors, technology has the highest sales exposure to Europe at about
25 per cent, according to a Bank of America/Merrill Lynch research note.

Among the other 138 S&P 500 companies reporting earnings are Ford Motor Co, United Parcel Service and Whirlpool Corp.

While the majority of companies have beaten earnings expectations,
revenue performance has been the worst for S&P 500 companies since
the first quarter of 2009.

With results in from 116 companies,
just 43 per cent of firms are beating revenue expectations. Sixty-seven
per cent of companies are beating earnings estimates, compared with a
long-term average of 62 per cent, Thomson Reuters data showed.

"With global growth slowing down, it's not surprising we're going to
see some mixed numbers on the revenue side," said Natalie Trunow, chief
investment officer of equities at Calvert Investment Management in
Bethesda, Maryland, whose firm manages about US$13 billion in assets.

While earnings are expected to dominate stock investors' attention this
week, the eurozone crisis is still capable of taking the spotlight.

Spain will tap the markets tomorrow when it sells three- and six-month
bills. Spain's 10-year bond yields hit a euro-era high of 7.3 per cent
on Friday.

The week's US economic data includes the Markit US
Manufacturing Purchasing Managers Index for July, due tomorrow. June's
reading marked the lowest showing since December 2010. Reuters

reps! im also watch for apple's results
results to be released after market of 24th July Central standard time (CST).
conference for the results is 4pm CST.

CST is -13 hrs from MYT.