Don’t underestimate the ability of the current US earnings season to provide a positive boost to US shares and investor confidence, especially the tech giants.
Already Google, Netflix and Intel have surprised on the upside, so much so that Nasdaq was driven to a new closing high early Saturday, our time.
That saw the Nasdaq rise 4.3% last week, far more than the 2.4% rise in the S&P 500 and the 1.8% gain for the Dow.
Some analysts say the tech stocks could help US second quarter earnings do a bit better than forecast.
FactSet reported at the weekend “Of the 61 companies that have now reported results for Q2, 72% have beat consensus earnings estimates, largely in line with the five-year average. However, nothing in the latest batch of results suggested any notable change from a macro perspective.”
FactSet said, “Tech was the standout this week as the favorable earnings takeaways from the Internet group and some strength in AAPL” (Apple) which rose +5.1% last week. That was ahead of the latest quarterly result from the giant early Wednesday, our time.
Along with a number of other tech stocks reporting this week, Apple will go a long way to determining the strength or otherwise of the June quarter reporting season, just as its March quarter results changed the look of that quarter’s outcome
So among the tech companies releasing earnings this week are IBM, Xerox, Microsoft, Yahoo, San Disk, Amazon (investors will be looking for another strong quarter from its cloud computing business), Texas Instruments, Qualcomm and Apple.
After the release last week of quarterly reports from Netflix and Google last week (and helped by an upbeat effort from Intel), investors have reset expectations for Nasdaq and tech stocks.
So far, big-name tech companies have provided the two biggest reactions from investors in this reporting season.
After Netflix reported stronger-than-expected subscriber, its shares increased 18%, while Google’s results triggered the biggest one-day move in the stock in more than seven years, as shares surpassed $US700 for the first time ever.
In fact Google shares ended up more than 16% on Friday night, our time, adding a massive $US65 billion in value and pushing the company to a clear second spot behind Apple in the last of America’s most valuable stocks. It is worth close to $US460 billion, Apple is well over $US740 billion.
Facebook’s shares rose as much as 5% to an all-time high of $US95.39 on Friday. It reports in a couple of weeks.
