“You are seeing expectations where people are a little ahead of themselves,” Matt McCormick, who helps oversee $9.1 billion as a money manager at Cincinnati-based Bahl & Gaynor Inc., said in a July 24 phone interview. “I would rather be betting on tech than banks this year.”
Technology Profits
Microsoft’s profit missed analyst projections on July 18 as Windows sales suffered from shrinking demand for PCs. The stock has tumbled 11 percent since then, compared to a 0.1 percent gain in the S&P 500. Intel, the world’s biggest chipmaker, is down 3.7 percent since it gave a disappointing forecast for third-quarter sales July 17, as the decline in the PC market may erode its largest business.
Google Inc., owner of the world’s most popular Internet search engine, missed profit and sales estimates on July 18 as mobile advertising crimped average prices. The stock has lost 2.8 percent since then. Broadcom declined the most among technology stocks this month as the maker of chips that connect mobile devices to the Internet said revenue would fall short of analyst estimates amid slowing smartphone sales.
Improving Reports
The six-biggest U.S. banks increased first-half revenue for the first time in four years, following about a half decade of cost cuts. JPMorgan shares are up 6.2 percent this month after the New York-based lender reported higher-than-estimated earnings.
“These banks will continue to tread higher,” Dan Veru, the chief investment officer who helps oversee $4.5 billion at Palisade Capital Management LLC, said by phone July 25 from Fort Lee, New Jersey. “Investors are now starting to say that we need to put their money to work in this sector.”
Goldman Sachs, the Wall Street bank that generates most of its revenue from trading, doubled earnings last quarter and exceeded the average analyst estimate, according to data compiled by Bloomberg. Record debt underwriting fees pushed first-half investment banking revenue to the most since 2007. The stock is up 30 percent in 2013.
Solid Data
“As the quarter progressed, solid economic data out of the U.S. began to moderate economic concerns,” Harvey Schwartz, the chief financial officer at Goldman Sachs, said on a July 16 conference call with analysts. “Client activity, risk appetite, and asset prices improved as a result of the increased confidence.”