NEW YORK ( TheStreet) -- The early returns on second-quarter reporting season are bearing out the idea that low expectations make for easy success. After skidding for much of last week, the major U.S. equity averages have all found reason to rally. Whether it's the stubborn insistence of traders to find a way to twist whatever comes out of the Federal Reserve into a justification for eventual quantitative easing or else latching onto positives in the mixed earnings reports thus far, stocks are finding buyers again. The Dow Jones Industrial Average, now up in three of the past four sessions, is back in positive territory for the month. The S&P 500 hit 1375 on Wednesday, its best intraday level since May 7, and the Nasdaq, thanks to its 1%-plus gain, looks primed to make a run at 3,000. Earnings would appear to have a lot to do with it as companies are turning negatives into positives. Intel ( INTC) getting a bump out of a lower revenue outlook being a prime example. Qualcomm ( QCOM) pulled off the same trick after the bell on Wednesday, rising nearly 7% in extended trades after missing in its latest quarter and giving a below-consensus outlook. According to data from Thomson Reuters, 71% of the S&P 500 companies that have reported so far -- roughly 13% of the index's components as of Wednesday morning -- have topped analyst expectations. Eleven percent have matched and 17% have missed. That's better than the historical quarterly averages of 62%, 17% and 20% respectively since 1994. Possibly of more importance is that profit growth has held steady. The blended year-over-year earnings growth rate -- reflecting actual results and shifting analyst estimates -- sits at 5.9% for the quarter, down just a fraction from 6% as of July 1. There's some sentiment building that all the bad stuff was baked in by the swoon earlier in the month with the potential negatives -- Europe's debt crisis, a mediocre second quarter, the fiscal cliff, softness in the economic data -- getting exposed and talked to death without much actual news to drive the trading. That may have opened up some room to run.
The charts were looking favorable last week as well, according to Mark Arbeter, chief technical analyst at S&P Capital IQ, whose bullish call on Friday is looking fairly prescient right now. "The major indices all pulled back to strong areas of technical support during the week, with prices finally bouncing hard on Friday," Arbeter wrote at the time. "We think the next leg of the current advance off the early June lows has begun, and we expect a lot less price volatility and a much more fluid move higher." He sees 1330-1340 as a zone of "pretty decent chart support" for the S&P 500 and is now expecting a move to the 1385-1422 range "before the next decent-sized pullback." The lazy optimism that seems to be boiling up was maybe personified by a call from Credit Suisse on Wednesday. The firm "marginally" reduced its year-end target for the S&P 500 to 1425 from 1440, saying it believes macro surprises are nearing typical trough points. ""While tail risks remain high (Euro, US fiscal cliff), we stay overweight equities," Credit Suisse said. With the 10-year Treasury hovering around 1.5% the past few days, it seems more investors may be starting to feel the same way. As for Thursday's scheduled news, the big earnings reports keep coming. Three more Dow components are on the docket -- Microsoft ( MSFT), Travelers Cos. ( TRV) and Verizon Communications ( VZ) -- along with other notables Morgan Stanley ( MS) and Google ( GOOG), which gets the deep-dive treatment here. The Internet search giant's stock has been a notable laggard in 2012, falling 10%-plus while the Nasdaq is sitting pretty with a 13% gain. The company's issues are well known, namely slowing revenue growth, margin pressures stemming from rapid expansion and a pricey acquisition of Motorola Mobility. The average estimate of analysts polled by Thomson Reuters is for earnings of $10.05 a share on revenue of $8.42 billion from Google in its fiscal second quarter ended in June. That compares to a profit of $10.08 a share on revenue of $8.14 in the first quarter and earnings of $8.74 a share on revenue of $6.92 billion in the same period a year earlier.
The sell side is still stubbornly bullish with 35 of the 43 analysts covering Google at either strong buy (19) or buy (16) and the median 12-month price target at $745, implying potential upside of 28% from Wednesday's close at $580.76. Oppenheimer, which has an outperform rating and $752 price target, is expecting an in-line quarter from Google, excluding the Motorola Mobility deal, but its estimate is for a profit of $9.42 a share on revenue of $8.33 billion, a performance would disappoint most on Wall Street. "We expect US revenues to slow 100 bps
basis points vs. 1Q on a slightly harder comp, with Int'l revenues slowing 600 bps, with up to 800 bps of currency headwinds," the firm said. "Our net revenue estimate is 1% below the Street. Focus on mobile cannibalization overstated, in our view, with data showing macro, geographic mix and 'Quality Improvements' having a greater impact." Oppenheimer believes Motorola Mobility has been an overhang for Google's stock, causing investors to take a wait-and-see approach ahead of the second-quarter report. The consternation stems from Motorola Mobility booking a loss of $4 million in 2011 despite generating EBITDA (earnings before interest, taxes, depreciation and amortization) of $208 million on the year. Ouch. Ahead of the conference call, the firm listed Google's key issues as "MMI integration/financial impact, CPC cost-per-click trend, impact of Nexus Tablet, and participation/health of CEO Page" and said currency weakness adds to the earnings headline risk. Check out TheStreet's quote page for Google for year-to-date share performance, analyst ratings, earnings estimates and much more. Elsewhere, arriving before the opening bell will be numbers from AutoNation ( AN), BB&T ( BBT), Blackstone Group ( BX), Cypress Semiconductor ( CY), Danaher ( DHR), Fairchild Semiconductor ( FCS), Fifth Third Bancorp ( FITB), Freeport-McMoRan ( FCX), Genuine Parts ( GPC), KeyCorp ( KEY), Nokia ( NOK), Novartis ( NVS), Philip Morris International ( PM), Quest Diagnostics ( DGX), Safeway ( SWY), Scholastic ( SCHS), Southwest Airlines ( LUV), Textron ( TXT), Travelzoo ( TZOO), Union Pacific ( UNP) and UnitedHealth ( UNH). The late tape is slated to see reports from Advance Micro Devices ( AMD), Capital One Financial ( COF), Chipotle Mexican Grill ( CMG), Dole Food ( DOLE), E*Trade Financial ( ETFC), NCR ( NCR), Rambus ( RMBS) and SanDisk ( SNDK). Thursday's economic calendar features weekly initial and continuing jobless claims at 8:30 a.m. ET; and existing home sales and leading indicators for June and the Philadelphia Fed's regional manufacturing survey for July all at 10 a.m. ET. And finally, like Qualcomm, Dow component IBM ( IBM) was getting a lift in late trades on Wednesday despite mixed numbers. Big Blue eased past Wall Street's earnings expectations but fell short on the top line, mainly because of foreign currency pressures. For the full year, though, IBM lifted its earnings outlook a tad, saying it now sees a profit of at least $15.10 per share, up from a prior view of $15 a share and ahead of consensus at $15.06 a share. The stock was last quoted at $193.66, up nearly 3%, on volume of more than 500,000. -- Written by Michael Baron in New York. >To contact the writer of this article, click here: Michael Baron.