US earnings season has been off to a strong start but that may be changing this morning with NASDAQ futures down 0.6% and Dow Futures up 0.1%. Up to this point, the earnings calendar had been dominated by the Financials sector where expectations had been relatively lower with the sector still recovering from its winter selloff.
Overnight, results have started to come in from stocks in other sectors which have posted relatively stronger year to date gains and had built in higher expectations, and it appears that in some cases we may be seeing a “Buy on Rumor, Sell on News” situation emerging. Despite significantly beating street expectations both Netflix* ($3.29 vs street $2.85, down 5.3% premarket) and Tesla* ($0.91 vs street $0.80, down 4.0% premarket) have retreated in overnight trading action.
Meanwhile IBM ($2.18 vs street $2.01), Johnson & Johnson ($2.80 vs street $2.62) and Activision Blizzard ($1.08 vs street $0.88) are all flat after reporting strong results, suggesting that in other cases investors may not be looking to sell against news but also don’t seem to be interested in stepping up to add to positions either. After the close today, results are due from railroad CSX and credit card provider Capital One.
Commodities appear to be getting a boost this morning from two positive Asia Pacific developments overnight. The Peoples’ Bank of China held its benchmark interest rate at 3.55%, and Australia, a big supplier of commodities to China reported strong employment (33K vs street 15K). This morning finds China-sensitive Copper up 1.7%, Natural Gas up 2.8% and WTI Crude Oil up 0.3% and trading above $75.00/bbl.
US jobless claims were better than expected this week (228K vs street 242K). US existing home sales are due at 10:00 am EDT (street 4.2M).
*Shares of Netflix and Tesla are held in portfolios managed by SIA Wealth Management.