Earnings Action – Monday Morning Market Memo – November 1, 2021

For a flavor of earnings reports last week: Shares of United Parcel Service drove about 7% higher after the company reported better-than-expected revenues and profits; Facebook shareholders were not smiling when their stock dropped almost 4% after the company missed on revenues; Alphabet gained nearly 5% after their report spelled out a beat on earnings and revenues, McDonald’s stock was hot – gaining almost 3% after earnings/revenues came in ahead of expectations….

Boeing stock lost a bit of altitude after earnings and revenues came in below analyst estimates; Harley-Davidson shares rode to higher ground after their numbers beat consensus;  Visa shares charged almost 7% lower after the company gave a disappointing revenue outlook; Starbucks shares cooled off, with shares losing over 6% after revenue fell short and China same-store sales shrank.  Saving the biggest for last, Amazon.com missed on both the top and bottom lines, while Apple’s revenues fell short – but their share prices fared relatively well – declining about 2.1% and 1.8% respectively.

Looking at overall earnings results for the third quarter of 2021 so far – according to data from FactSet: With 56% of Standard & Poor’s 500 companies reporting actual results, 82% of S&P 500 companies have reported a positive EPS (Earnings Per Share) surprise and 75% of S&P 500 companies have reported a positive revenue surprise.

These better-than-expected earnings results have been supporting the market and pushing stock prices higher.  All three major stock market indices registered their fourth consecutive positive week, and closed at record highs at last week.  The Dow Jones Industrial Average rose .4% to 35,820 – the NASDAQ Composite jumped 2.7% to 15,498 – and the Standard & Poor’s 500 Index added 1.3% to 4,605.

Looking to the week ahead, we’ll get another fresh batch of earnings reports to digest.  Companies scheduled to report include CloroxAmgenConocoPhillipsPfizerBooking HoldingsCVS HealthAirnbnbDuke EnergyKelloggModernaSquare, and Uber Technologies.  Also, the Federal Open Market Committee meets this week and is scheduled to announce its monetary-policy decision on Wednesday.

The consensus view in the financial markets is the Fed will announce tapering – reducing their $120 billion of monthly asset purchases.  So the surprise would actually be if tapering was NOT announced.  Get ready for a busy week!

All the best – Southport Station Financial Management, LLC