Earnings Parade Ahead! – Monday Morning Market Memo – July 27, 2020

Earnings Parade Ahead! – Monday Morning Market Memo – July 27, 2020

Good morning,

The week ahead is the busiest week of earnings season – with over 1/3rd of the companies in the Standard & Poor’s 500 Index and a dozen Dow Jones Industrial Average components scheduled to report results for the second quarter of 2020.

Companies reporting include 3M, McDonald’s, Pfizer, Starbucks, Visa, Boeing, PayPal Holdings, United Rentals, Ford Motor, Kellogg, Kraft Heinz, Mastercard, Procter & Gamble, United Parcel Service, Caterpillar, Chevron, Colgate-Palmolive, Merck, Facebook, and Exxon Mobil. Perhaps the most anticipated reports of the week are from the major tech companies sporting 1+ trillion dollar market cap valuations – Alphabet, Amazon, and Apple.

Looking at aggregate earnings expectations for the Standard & Poor’s 500 Index, the blended earnings decline is 42.4%, if that is the actual decline for the quarter, it will mark the largest year-over-year decline in earnings reported by the index since the fourth quarter of 2008, according to FactSet. Away from earnings, there will be several other items for investors to digest.

Wall Street will be looking to Washington as to what the next round of coronavirus stimulus will include (the package is expected to be in the $1-2 trillion range), the Federal Reserve meets this week and announces its policy decision on Wednesday (where it is expected to keep interest rates near zero), and the preliminary report on second quarter Gross Domestic Product, which is expected to drop in the range of 30-40%.

While earnings will be of course be important, especially in stock specific situations, the market has been fueled by monetary and fiscal policy stimulus as well hopes for a vaccine – and we expect these things to be extremely important to the market going forward as well. So, it is NOT all about the earnings! As always, please call us with any questions or if you would like to set up a meeting.

All the best – Southport Station Financial Management, LLC