Morning Minutes 4/20/2020

Morning Minutes

Stocks Rebound With Focus Back on Earnings

April 20, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

Stock markets in North America and Europe are bouncing back from two days of sharp declines this morning. With the May oil contract now closed, oil price volatility has subsided and investors have turned their attention back to earnings season and the economic outlook.

US index futures are all up about 1.0% this morning. Dow futures are up 236 points, clawing back some of yesterday’s 631-point loss. In Europe, gains vary between 0.4% for Paris to 1.4% for London with Frankfurt up 0.9% and Milan up 1.1%.

Corporate reports have been mixed overnight with some positive Q1 reports tempered by uncertain guidance. Highlights include:

Canadian Pacific, for example, beat expectations on EPS ($4.42 vs street $4.05) on strong Q1 grain shipments (even with the February disruptions to rail service), but indicated that it expects traffic to decline in the weeks and months ahead, particularly for crude oil and automobiles.

Netflix reported EPS below expectations ($1.57 vs street $1.65), but added 15.7 million subscribers in the quarter, far above the 8.2 million the street had expected as shuttered in consumers signed up. For Q2, the company guided toward 7.5 million net subscriber additions worldwide but indicated it’s anyone’s guess at the moment.

Snap has popped 19.9% in US premarket trading after the social media company announced a 44% jump in revenues over a year ago to $462M, and a 20% increase in daily active users to 229 million.

Personal goods producer Kimberly-Clark saw an 11% increase in organic sales from consumer stockpiling which boosted EPS above expectations ($2.13 vs street $1.97).

Chipotle Mexican Grill beat the street on EPS ($3.08 vs street $2.90), with an 80% jump in online orders boosting sales by 7.8% overall and same store sales by 3.3%.

Texas Instruments beat expectations ($1.24 vs street $1.00) but indicated that the COVID-19 impact is expected to impact more in Q2 and guided for EPS of $0.64-$1.04, mostly below the $1.03 street estimate.

Results are also due today from Boeing, Alcoa, Tesla Motors, and Visa.

Crude oil contracts remain active with WTI up 1.0% near $11.75/bbl and Brent up 1.4% trading near $19.60/bbl. Last night API announced a 13.2 mmbbl increase in weekly US oil inventories, similar to last week’s increase. Today at 10:30 am EDT, the street is expecting DOE to report a 15.1 mmbbl increase in its weekly US oil inventories, down from last week’s 19.25 mmbbl jump.

 

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