Courtesy of Blain.
It was a tale of very different markets Friday as the NASDAQ was hit by some key earning disappointments but other indexes held in decently. The S&P 500 finished flat while the NASDAQ drop 0.80%.
“It appears that the market is generally brushing off disappointing earnings from big tech companies, because the vast majority of companies are still beating lowered estimates,” said Joe Saluzzi, partner, co-head of Equity Trading at Themis Trading. “By the end of the earnings season, companies can resume their buybacks and if central banks remain accommodative, there is no reason for markets not to climb higher and stretch valuations further, despite very weak fundamentals,” Saluzzi said, adding that markets had not traded on fundamentals for years.
Uber bull Tom Lee says the market will make new highs; here are his 3 reasons why. Bespoke Investment Group agrees.
In a note to investors, Bespoke said the S&P’s cumulative advance/decline line — the sum of the daily number of advancing stocks minus decliners in the index since the bull market began in 2009 — has already hit a new high. “This suggests that the underlying health of the S&P is actually stronger than what the index’s price is telling us,” Bespoke said.
The S&P 500 is pulling back a bit but nothing too much at this point to worry about. The NASDAQ had popped out of a base (marked in yellow below) but then – unlike the S&P 500 – sort of stalled in a new range (marked in purple). Today’s action pushed it back down to the yellow range so it’s chart certainly has a wart or two.
“Technically the markets are in a much more positive trend. We have broken the May downtrend. Internals have improved,” said Lance Roberts, chief investment strategist at Clarity Financial. But “this is a very short-term improvement.”
Meanwhile the Russell 2000 actually had a quite fruitful day Friday.
The NYSE McClellan Oscillator remains fine.
Microsoft (MSFT) posted earnings a touch below estimates, with revenue essentially in-line, as continued weakness in the personal computing market weighed. Earnings per share came in at $0.62 on revenue of $22.08 billion.
Google’s parent Alphabet (GOOG) reported earnings that missed on both the top and bottom line as the firm increased its investments in new projects. Alphabet’s category called “other bets,” which includes projects like Google X and its self-driving car unit, posted an operating loss of $802 million.
Starbucks’ (SBUX) eported second-quarter revenue that missed estimates and offered third-quarter guidance that came in on the low end. Starbucks reported earnings per share of $0.39 on revenue of $4.99 billion and said it expects earnings of $0.48 to $0.49 per share for the current quarter. Analysts had expected earnings of $0.49.
Norfolk Southern (NSC) jumped after the railroad operator slashed costs during its latest quarter.
We continue to roll through earnings next week; we will see you back here Monday – enjoy the late spring weekend.
