Earnings reports will provide the primary backdrop for today’s trading action given the almost empty economic calendar. It is perhaps fair to say that this earnings season has turned out to be better than expected, largely due to downbeat expectations in the run up to the releases. It is a different-looking picture on the economic front, however, where the news flow lately has been far less inspiring.

The housing data has been weak, with Starts in March coming short of expectations, though Permits painted a somewhat favorable picture. We will be getting the March New Home sales data next week, but the housing ‘green shoots’ narrative has lost some of its strength. We may be seeing early signs of softness in the industrial sector as well, as reflected in this week’s underwhelming Empire State and Philly Fed readings. Deceleration in manufacturing will be particularly troubling since this had been a key pillar of the recovery thus far.

But the most troubling data point has been on the labor market front, where we have yet to see any evidence from weekly Jobless Claims that the March jobs miss was a one-off event. Loss of momentum on the jobs front would be a particularly significant blow, as it will have negative effects in expectations for consumer spending, housing and elsewhere. Is this apparent stalling in recent economic data a reflection of loss of momentum in the economy, along the lines of what we encountered at the onset of Spring in 2011 and 2010, or something related to quirks in seasonally adjusting the data? Hard to say at this stage, but next week’s advanced read on first quarter GDP will provide for interesting reading.

While economic data may not have been reassuring enough lately, but the first quarter earnings season has turned out to be much better than expected. With almost a quarter of the results already in, companies have not only been coming ahead of expectations, but also generally doing better than what these same companies did in the preceding quarter. Of this morning’s major releases, we got positive surprises from General Electric (GE), Honeywell (HON) and Schlumberger (SLB) to name just a few.

General Electric’s strength was mostly from the company’s industrial businesses. The year-over-year revenue comparison for the conglomerate also becomes favorable once results are adjusted for the sale of the NBC Universal business. Honeywell not only beat expectations, but also provided positive guidance.

We also got better-than-expected results from Schlumberger, the oilfield services giant, on strength in international deepwater markets. McDonald’s (MCD) posted in-line earnings and revenue results, same-store sales in the quarter up 7.3% worldwide and an impressive 9% in the U.S.

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