Earnings Focus

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Key Takeaways

  • Earnings Will Be Focal Point
  • Rate Increase Not As Bad As Feared
  • Dollar Weakening

Last week kicked off earnings season with bank stocks such as JPMorgan, Morgan Stanley
MS
and Wells Fargo
WFC
all having reported. This morning, we’ve already heard from Goldman Sachs who exceeded expectations.

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Goldman reported earnings of $7.73 vs. an expectation of $6.58 and they also beat on their revenue number by a full $1B. That has sent the stock nearly $10 higher in premarket trading where stocks were already showing signs of follow through after Friday and a largely unchanged market last week.

After pulling back on both Monday and Tuesday last week, markets turned around and strung together three winning days in a row. That left markets relatively flat for the week. Over the weekend, news broke that the Fed is leaning more toward a 75 basis point rate increase. It was feared the Fed would raise rates a full percentage point after last week’s stronger than expected consumer spending number. At the same time, we learned hopes for a global corporate tax rate of 15% were looking less likely, which interestingly caused crypto prices to jump.

Heading into this week, we will start getting into the heart of earnings season. Later this week we’ll hear from heavyweights like Tesla
TSLA
and Netflix
NFLX
, Netflix just announced an advertising deal with Microsoft
MSFT
as the streaming service is looking for ways to beef up revenues. Tesla will also be of interest not just because of Tesla, the company, but also because of Elon Musk’s Twitter
TWTR
involvement (Twitter reports earnings Friday).

In premarket trading, futures are looking stronger with both the S&P 500 and Nasdaq up around 1%. That is likely being aided by the news about the Fed’s plans with respect to interest rates and the subsequent drop in the US dollar as well. The weaker dollar is also helping push crude oil prices up slightly, to just over $96/barrel.

Markets will be left without much economic data this week. The one real exception will come Tuesday with the release of existing home sales. That leaves earnings as the major potential catalyst for the market. For retail traders, earnings can present potential volatility. Options and futures options traders can look to take advantage of the rich premium. While longer term investors would do best to not get too caught up with any potential wild swings and stick with their investment plan.

tastytrade, Inc. commentary for educational purposes only.

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Credit: www.forbes.com /

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