Premarket Stock: Tech Earnings Can Supercharge a Greedy Market


What’s happening: Investors who think of rising value actually point to profits from future choices Apple ()AAPL) And Facebook ()American Plan), Which reports last quarter results after the US markets closed on Wednesday. The solid numbers may reinforce the feeling that the stock is exclusively the place to be compared to low-yielding bonds.
Microsoft ()Msft) Set the tone while sharing earnings after the market closes on Tuesday. The company surpassed Wall Street analysts’ expectations of about $ 3 billion in the quarter and set a three-month sales record. Shares are up 2% in premarket trading.

Breaking it: The epidemic continues to extinguish Microsoft’s business, which – as my CNN business associate Claire Duffy reports – helped companies get to work with the sale of computer and gaming systems, as well as cloud computing tools is.

“These were blankout numbers that would be another feather in the cap for the tech sector,” WebSch Securities analyst Daniel Ilyas told clients. “Cloud growth party is just beginning.”

Apple is also expected to show strong demand for electronic devices, especially given that it launched its new iPhone 12 in the previous quarter. Bank of America analyst Vamsi Mohan said in a research note this week, “Despite the subsequent launch of iPhones, demand for high-end models remains strong.”

Facebook, for its part, is set to get a boost from new shopping and video capabilities, which brought in significant revenue at home due to the number of people sticking to their phones and computers.

On the radar: we can’t forget Tesla ()TSLA)Of course, the results of which still come after the bell on Wednesday. With their March low to 1,122%, the stock has become a symbol of the prevailing market excess.

The company has been profitable for five straight quarters, marking the first time in its 17-year history. But now that this S&P 500 has been closely watched, there is new pressure to deliver. Guidance on 2021 deliveries will be important.

Big picture: According to the CNN Business Fear and Greed Index, greed has returned to the markets. Two metrics for determining market perception – stock price strength and market momentum – indicate “extreme greed”.

But strong results from Internet giants will only feed the pro-stock narrative, propelling the tech-heavy Nasdaq Composite to new heights. The matter of bubbles is only due to growth.

“We don’t think we’re in the final stages of a bubble in the overall stock market,” said John Higgins, chief economist at Capital Economics, in a note on Tuesday. “Nevertheless, we acknowledge that the surge in Nasdaq composites suggests that we may be in the early stage of at least one bubble, even as the index climbed partly from boosting earnings of companies in the technology sector Let the universal pandemic be justified. “

‘Unnatural, insane’ GameStop rally keeps going

Reddit-fuel rally GameStop ()GME) The shares show no signs of ending, as individual traders continue to hold the stock at the struggling video retailer.

Latest: GameStop’s stock exploded 93% on Tuesday, ending the day at $ 147.98. The bets against GameSpot are also being taken advantage of by traders running to buy stocks to limit their risk as a “low squeeze”.

The struggling company now has a record market value of over $ 10.3 billion. Its stock is 64% to $ 242 per share in pre-prime trading after Tesla CEO Elon Musk tweeted about the frenzy.

Remember: GameStop shares, which are expected to lose money for the next two years, closed at $ 18.84 per share by 2020. It is clear that demand has completely fallen short of expectations about future earnings and implied value.

Instead, online commentators are re-watching what they see as David vs. Goliath Triumph against hedge funds and short sellers, with the joy of democratizing investment through no-fee trading platforms like Robinhood.

But dramatically investing in GameStop’s stock is causing growing concern in the community – even among those who were already sharper.

By “The Big Short” fund manager Michael Berry revealed a stake in the company in 2019, which helped fuel interest. Now, as Bloomberg reports, he is sounding the alarm.

“If I put [GameStop] On your radar, and you did well, I’m really happy for you. However, what is going on now – there should be legal and regulatory consequences, “he tweeted on Tuesday. It is unnatural, insane and dangerous.”

US companies still struggling with capital riots

Despite vocal pledges by some companies to take bold action after the January 6 siege on the US Capitol, many US corporate giants are waiting for their future political give-up, a new analysis from my CNN colleagues reveals .

CNN surveyed about 280 companies in the Fortune 500 that supported 147 Republican lawmakers who objected to certifying President Joe Biden’s victory. About 150 responded, representing $ 14 million in donations to politicians during the 2020 cycle.

Among the findings: Many of the firms chosen to suspend campaign donations have made broader contributions across the board, rather than targeting Republican objections.

While 120 companies said they had decided to stop or end political giving in one form or the other, 73 said they would withhold donations to all federal candidates. Only 31 companies had specific timetables for how long they would suspend political activity.

Sheila Krumholz, executive director of the Nonpartisan Center for Responsive Politics, said how long the corporate revolt will last is an open question, especially since fundraising campaigns usually slow in the months following the election.

“Right now, it’s easy enough for them to sit back,” Krumholz said. “It is hard to imagine that this will happen through the primaries and general election in 2022.”

You can find a breakdown of how each company responded here.

next

AT&T ()T), Anthem and Boeing ()B. A) Report results before opening of US markets. Apple ()AAPL), Facebook ()American Plan), Levi Strauss ()Levy) And Tesla ()TSLA) Follow after shutdown.

Even today: The Federal Reserve announces its latest policy decision at 2 pm ET, followed by a press conference led by Chair Jerome Powell. Any comments on the purchase of the Fed Bowder or raising interest rates will be under the microscope.

Coming Tomorrow: How did the US economy fare during the last three months of 2020? Investors will find out when the GDP number is posted.

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