Hey Traders,
Today, I want to address the current market sentiment regarding earnings.
It’s Tuesday, and the market is not reacting positively to the earnings reports that have come out so far. We’re seeing some significant movements and there’s more to come, so let’s dive in.
Earnings Reactions: A Mixed Bag
So far, we’ve seen a mixed reaction to the earnings reports. Procter & Gamble (PG), for instance, took a big hit due to issues related to diaper pricing.
It’s a bit strange to see such a substantial move from something like diaper prices, but that’s the market for you — always full of surprises.
On the other hand, Pfizer (PFE) reported without much impact.
The real action, however, is just starting. Today, after the close, we’ll see earnings from Microsoft (MSFT) and Arista Networks (ANET).
These reports are expected to create big after-hours trading opportunities. If you’re someone who likes to trade in the after-hours session, be prepared for some gaps up or down.
What’s Ahead?
Wednesday brings more excitement with earnings from Meta (META), Arm (ARM), and Qualcomm (QCOM). These reports — especially from Meta and Arm — are expected to be real market movers.
Arm is a chip stock and has been weak recently, so its performance will be particularly interesting to watch.
Then, Thursday after the close, we’ll see earnings from two giants: Apple (AAPL) and Amazon (AMZN).
These reports will give us a lot of insight into the consumer sector and the state of tech.
Given the recent rotation out of high-tech stocks like Nvidia (NVDA) and Tesla (TSLA) into more conservative stocks like BlackRock (BLK) and JPMorgan (JPM), it’ll be fascinating to see how these earnings play out.
Tech Sector Under Pressure
The tech sector is currently under a lot of scrutiny. Even if earnings are good, they might not be good enough because investors are really looking for growth and profitability, especially concerning expenses related to AI.
We saw this with Google’s (GOOG) expenses associated with AI when they reported earnings last Tuesday after hours. Investors found the costs to be too much to handle and sent the stock tumbling as much as 10%.
This concern could spill over into other tech giants like Meta, Google, Amazon, and Apple.
Generative AI has to start paying off soon, or investors could continue to punish companies.
I personally think we’re still early in the AI game, and while chipmakers are profiting, the big question is how sustainable that profit is and whether there will be a slowdown in chip buying if AI doesn’t pan out as expected.
Key Takeaways
The bottom line is that investors are currently unhappy, and it’s not just about the earnings reports but also the forward guidance.
Good earnings alone might not be enough to turn the market around. Example: McDonald’s (MCD) missed earnings on every measurable metric, but the stock still popped due to their forward guidance.
That alone gives us insight into changing consumer patterns.
As we navigate through this earnings season, remember to pay close attention to what companies say about their future, not just the earnings numbers they release. The guidance and forward-looking statements are what really drive market reactions.
Stay tuned and take advantage of the volatility.
Trade well,
Jack Carter
P.S. In times where markets turn bearish, I’m always glad I have a solid dividend portfolio working for me. I put mine together using 3 Key Rules — and I’m sharing them with you if you register your spot for my FREE training here.
