Earnings Action – Monday Morning Market Memo – August 2, 2021

Earnings Action – Monday Morning Market Memo – August 2, 2021

Good morning,

The earnings action last week was highlighted by mega cap technology companies. Apple, Alphabet, Amazon, Facebook and Microsoft all posted earnings that were better-than-expected. Generally speaking however, the earnings beats did not translate into share price advances. The most notable stock price reaction came from Amazon, which fell over 7 ½ % due to a miss on revenues and weaker guidance. Away from technology and to the energy sector – two big oil companies – Chevron and ExxonMobil beat on both the top and bottom lines amid increased demand and a jump in oil prices.

After the market digested all these and more earnings reports, the result was a slightly down week – with the Dow Jones Industrial Average and Standard & Poor’s 500 Index each dipping about 4/10 of a percent, and the NASDAQ Composite falling 1.1%. Factors behind the weekly decline included profit-taking, normal volatility, and concerns over the Covid-19 Delta variant and its potential impact on the reopening momentum.

Despite last week being negative, all three major indices finished in positive territory for the month of July – with Dow and NASDAQ each gaining over 1% and the S&P 500 adding about 2.3%. The S&P 500 is now working a 6-month winning streak.

Looking at earnings season in total so far: For the second quarter of 2021 – with 59% of S&P 500 companies reporting actual results, 88% have reported a positive EPS (Earnings Per Share) surprise, and the blended earnings growth rate for the S&P 500 is 85.1 percent. If that is the actual growth rate for the quarter, it will mark the highest year-over-year earnings growth rate reported by the index since the fourth quarter of 2009 – according to data from FactSet Research.

Looking to the week ahead, stocks are starting the first trading day of August in positive territory, with the major indices all up about ½ percent so far this morning. It’s another busy week, as a large batch of earnings reports are on the docket! As always, feel free to call us with any questions you may have or if you would like to set up a meeting.

All the best – Southport Station Financial Management, LLC