After getting off to a fairly positive start with reports from several large banks, earnings season is now in full gear. Highlights from last week include some household names: Procter & Gamble rose 3.5% after a clean report, beating on earnings and raising its sales forecast; Tesla shares drove 10% lower after the company reported weaker-than-expected margins, and price cuts dampened investor sentiment; Netflix shareholders watched their stock decline about 3% as forward guidance was below estimates, although the earnings number was a beat.
Despite many individual/specific earnings movers, the major stock market averages were little changed last week. The Dow Jones Industrial Average nudged .2% lower to 33,809 (snapping a four-week winning streak), the tech-heavy NASDAQ Composite declined .4% to 12,072, and the Standard & Poor’s 500 Index dipped just .1%, to 4,134. The market has been in a tug of war, with a restrictive/tightening monetary policy by the Federal Reserve (meaning higher interest rates) on one end of the rope, and the economy and earnings holding up relatively well, on the other end. Both sides have been about evenly matched, as evidenced by the relative sideways action of the stock market.
Looking at overall earnings results so far: For the 1st quarter of 2023 (with 18% of companies in the Standard & Poor’s 500 Index reporting actual results), 76% of S&P 500 companies reported a positive Earnings Per Share surprise and 63% of S&P 500 companies have reported a positive revenue surprise, according to FactSet.
Looking to the week ahead, get ready for a deluge of earnings reports! Investors will be focused on big technology, with Apple, Amazon.com, Microsoft, Alphabet, and Meta Platforms all scheduled to report. Other companies reporting include General Electric, McDonald’s, Halliburton, General Motors, Amgen, Bristol-Myers Squibb, PepsiCo, Hershey, Intel, Chipotle Mexican Grill, United Parcel Service, Verizon Communications, Visa, Hershey, Colgate-Palmolive, Boeing, Coca-Cola, and Exxon Mobil.
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All the best – Southport Station Financial Management, LLC