Although US bank earnings were well received to kick off the current earnings season, it has become increasingly clear that investor reaction to results could vary dramatically between sectors. In particular, investors appear to be getting rattled by reports from the technology and communications sectors. Even though results appear positive so far, investors have been using soft guidance relative to high expectations as a reason to head for the door. The negative reaction to tech and communications earnings started with a choppy response to Netflix numbers and accelerated yesterday with IBM which fell 9.5% despite results beating expectations.
This morning finds two more stocks plunging following what on the surface looked like positive earnings reports. Intel is down 9.8% premarket despite positive earnings ($1.71 vs street $1.11) as investors focused more on a sales miss ($18.1B vs street $18.2B), chip shortages and capital investment.
Social media site Snap, meanwhile, has plunged 19.8% premarket despite positive EPS ($0.17 vs street $0.11) as sales missed expectations ($1.07B vs street $1.10B) and management indicated that changes to Apple’s privacy rules have impacted its business more than expected. Apple is unchanged premarket on this news but social media competitors Facebook and Twitter are both down about 3.0% premarket today.
With technology and social media stocks sliding today, NASDAQ futures are underperforming their peers this morning, down 0.2%, compared with a 0.2% gain for Dow Futures. Commodities are climbing today, led by a 4.1% pop for Natural Gas, while WTI Crude Oil is up 0.9% and Copper is up 0.4%.
There are a number of other earnings reports out in the US today including American Express ($2.27 vs street $1.80), Honeywell ($2.02 vs street $1.99, Mattel ($0.85 vs street $0.75, up 6.6% premarket), and Whirlpool ($6.68 vs street $6.12, down 3.3% premarket after management discussed supply issues).
It’s also a busy morning for economic news. Fed Chair Powell speaks at 3:00 pm EDT. Canadian retail sales roared back even more than expected (2.1% vs street 2.0% and previous -0.6%). Flash PMI reports from Europe this morning were generally positive, particularly the UK, which despite all the recent media coverage of fuel shortages, other supply disruptions, and a new COVID variant, beat expectations for both Manufacturing (57.7 vs street 55.8) and services (58.0 vs street 55.4). US flash manufacturing PMI is due at 10:00 am today with the street expecting readings of 60.3 for Manufacturing and 55.1 for services.
New Video: SIA Wealth September Webinar Replay
A replay of our special Market Outlook Webinar with Ted Bader “Uncharted Waters: Signs of a coming storm” is now available.
YouTube Version: https://youtu.be/1rM1jdKzOy0
SIA Wealth In The Media
SIA Wealth Management Chief Market Strategist Colin Cieszynski recently appeared on BNN Bloomberg where he discussed current trends in world markets and earnings season market reaction so far.