Key Takeaways
- Tech Earnings And Economic Data Bring Mixed Signals For Market Direction
- Alphabet’s Strong Cloud Growth Boosts Sector; AMD Dips On Guidance
- Optimism Grows Despite Mixed Earnings And Slight Economic Slowdown Signs
It’s been a quiet start to the week for stocks, but things could begin getting interesting today. After a day in which the S&P 500 fell 0.2% and the Nasdaq Composite gained 0.8%, we had a number of earnings released. That train will continue today along with the release of some important economic data. Here is a recap of the overnight earnings, starting with companies that are trading higher.
Alphabet shares jumped 6% after the company posted strong numbers. Advertising revenues came in stronger than expected, but the big driver was cloud revenues, which increased 35%. The cloud number was not only important for Alphabet but could also be a positive sign for companies such as Microsoft, who report after the close tonight. Shares of Reddit are higher by 21% in premarket after the company posted a profit and issued a better-than-expected forecast. Humana announced earnings and revenues that beat estimates. The insurer also raised full-year guidance. That stock is higher by a little over 1% in premarket. Also, Visa is trading higher by 2% in the premarket. Revenues were up 12% while net income jumped 14%. However, the part of the story garnering most of the attention is that the company plans to lay off 1,400 workers.
Turning to some stocks trading lower after earnings, Advanced Micro Devices reported earnings that were in line with expectations, despite revenues coming in slightly higher than forecast. However, the company’s full year guidance was unchanged, and many analysts were expecting that to increase. As a result, shares of the chipmaker are down 8% in premarket trading. Eli Lilly is down almost 11% following an earnings and revenue miss. The company reported disappointing sales of its weight loss drug, Zepbound as well as its diabetes treatment, Mounjaro. Finally, Caterpillar is trading lower by 4% premarket. Higher borrowing costs and demand slowed by inflation led to an unenthusiastic future guidance. Caterpillar is not only a stock, but it also often seen as a bellwether for the broader economy.
Speaking of the broader economy, this morning we got a look at third quarter GDP, which came in at 2.8% against forecasts calling for 3% growth. That number follows a JOLTs number on Tuesday that showed fewer job openings than forecast and was down from the last reading. At the same time, however, the latest reading on Consumer Confidence came in very strong with the biggest uptick in three years. Expectations for a strong stock market were high and concerns over a recession were low. While I’ve often called this market a rally no one wants to embrace and an economy no one notices, there is a sense that optimism is increasing.
For today, I’ll be watching the tech sector to see whose earnings, between Alphabet and AMD set the narrative for the day. Then tonight, after the close, we’ll hear from Microsoft, Meta Platforms and Coinbase. Microsoft and Meta will be interesting from an Artificial Intelligence (AI) perspective. Microsoft’s cloud business will also be a focus. Then with Coinbase, I’lll be interested to see what impact, if any, bitcoin trading north of $70 thousand has had. As always, I would stick with your investing plan and long-term objectives.
tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.
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