Busiest Week of Earnings Ahead – Monday Morning Market Memo – January 25, 2021

Good morning,

Starting with a look at last week – the Dow Jones Industrial Average rose .6%, the Standard & Poor’s 500 Index gained 1.9%, and the NASDAQ Composite jumped 4.2%, finishing the week at an all-time high.  Also ending the week at a new high was the small-cap benchmark Russell 2000 Index, which posted a weekly gain of 2.2%.  The gains were largely fueled by hopes for a large economic relief package out of Washington, a ramp up in the pace of vaccine dosing, and numbers/commentary from Netflix that the market viewed positively.

Netflix shares rose over 16% after their report, although missing on the headline earnings numbers, the company beat on revenues, added more subscribers than expected, and said it would consider returning cash to shareholders.  Not faring so well after their earnings reports and conference calls were Dow components Intel and International Business Machines, which both fell nearly 10% contributing to Friday’s drop in the Dow Jones Industrial Average.  Last week’s earnings action was just an overall warmup however, as the week ahead is the busiest week of earnings season!

Over 100 S&P 500 companies are scheduled to report this week.  Earnings from mega-cap/technology companies including FacebookMicrosoftApple, and Tesla are some of the most highly anticipated reports investors will be watching this week, and as a group these can be market moving reports.  Other notable companies reporting include 3MAmerican ExpressGeneral ElectricJohnson & JohnsonAT&TBoeingDowMcDonald’sVisaMastercardChevronColgate-PalmoliveGeneral ElectricStarbucksCaterpillar, and Verizon Communications.


Looking at the overall earnings results so far for the fourth-quarter of 2020 – with 13% of the companies in the S&P 500 having reported actual results, 86% of the companies have reported a positive EPS (earning per share) surprise and 82% have reported a positive revenue surprise – according to FactSet.  Remember, earnings are the mother’s milk of stock prices, and are what drive the market over the long run!


As always, please feel free to call us with any questions you have or if you would like to set up a meeting.


All the best – Southport Station Financial Management, LLC