Earnings season officially began on Friday April 13 with several major banks reporting their first quarter earnings. And beginning with the banks, stocks could not hold their gains after good reports…and in some cases great reports. Mr Market was not impressed.
So after the banks struggled, everyone was thinking well the FANG stocks, technology and even some super industrials will get this market going. Well on Monday April 16 after the bell, Netflix announced great earnings. The stock exploded on Tuesday but by the close of trading 5 days later it had given back all of Tuesday’s gains.
Goldman Sachs (GS) and IBM announced on Tuesday, April 17 and both got destroyed. GS dropped 7.2% over the next 7 trading days. IBM dropped 10% in 3 days.
Big Tech to the Rescue
But tech will drive the market or so everyone was saying. Alphabet (GOOGL) announced on Monday April 23 after the bell. If dropped 4.8% the next day and was still down 3.9% at the end of the week.
Facebook (FB) is putting in a gallant effort. It exploded up 9.1% last Thursday, the day after earnings were reported.
Amazon (AMZN) had an amazing earnings report after the bell on Thursday. The stock exploded on Friday, opening up 7.6% at new all-time highs but it couldn’t hold it. It ended the day cutting that gain almost in half.
Microsoft (MSFT) acted similar to AMZN on Friday. Opening up 3.5% at new all-time highs but closing up just 1.6% and at one point during the day was actually down slightly.
Intel (INTC) also reported Thursday night with AMZN and MSFT. And it’s price action was worse than the other two. Intel opened up 4.5% at new multi-year highs but closed the day down $0.32.
Mr Market Not Impressed
So far Mr Market is still not impressed. There have been spectacular reports and all the FANG stocks have now reported. Yet from the close on April 12 to the close on Friday April 27, the Nasdaq Composite Index is down 20.45 points and the Nasdaq 100 Index is flat. The S&P 500 Index is up just 5.92 points while the Dow Jones Industrial Average is down 172.06.
The test for these big tech stocks is the price action over the next week. Apple reports on Tuesday after the market closes. Will Apple come to the rescue?
Did CAT Just Name That Tune?
And with all the big name stocks reporting we can’t forget about Caterpillar (CAT). People look at CAT as somewhat of a proxy for the global economy with their big yellow machines being used to drive economic growth in every continent on the globe.
CAT reported earnings before the market opened last Tuesday. They were spectacular and they upped their estimates for the full year. But then on the conference call with analysts, the CFO said that this first quarter was the high water mark for the year.
Wait…what did he say? This first quarter was as good as it gets? And the stock sold off. CAT had opened up 3.7% but by the end of the day it was down $9.59 or 9.4%. So did CAT just name that tune? Is what’s playing in Peoria, the tune for the overall market?