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“Companies that get confused, that think their goal is revenue or stock price or something. You have to focus on the things that lead to those.” – Tim Cook
With three of the big five reporting earnings after the close yesterday, investors got through the night of earnings relatively unscathed. As we approach the opening bell, Alphabet (GOOGL) and Microsoft (MSFT) are both indicated higher while Apple (AAPL) is just modestly lower. The fact that all three of these stocks rallied sharply into earnings and none are down significantly post-earnings is a pretty encouraging outcome.
There’s not a lot of economic news to contend with this morning, but we will get an FOMC decision on interest rates at 2 PM eastern and a press conference from Chairman Powell at 2:30. Earnings data is still coming in hot and heavy, though, and will be that way right up through Friday morning. So far the results remain extremely strong, but stock price reactions, in aggregate, have been less impressive.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, the latest US and international COVID trends including our vaccination trackers, and much more.
As mentioned above, AAPL is trading 1% lower in reaction to last night’s earnings report. Some may look at that weakness as a sign that the best of times are behind the stock, but we always caution against reading too much into one day’s action. Including last night, AAPL has handily topped EPS and revenue forecasts in each of its last five earnings reports, yet the stock is now on pace to have a negative one-day reaction to earnings for the fourth straight quarter. Last July, AAPL surged 10.5% on the day after its earnings report, but following the last three reports, the stock declined 5.6%, 3.5%, and -0.1%, respectively. Despite this current streak of negative reactions to earnings, though, the stock has rallied 57% over that same time span. Nobody knows what the future holds, but one day does not always make a trend.