MARKET SNAPSHOT: Stock Market Looks To Apple, Google Earnings For Jolt
October 22 2016 - 8:15AM
Dow Jones News
By Sue Chang, MarketWatch
The average stock has risen 0.86% after third quarter
results
The stock market may finally get the excitement that's been
lacking in the coming week, with the two most valuable companies in
the U.S.--Apple Inc. and Alphabet Inc.--slated to report quarterly
results.
The tech giants' earnings come at a time when the market has
been gripped by ennui as investors are hesitant to buy into
equities despite better-than-expected earnings as political and
rate-policy uncertainties dampen appetite for risk.
"Investors remain leery, in part to election jitters, Brexit
concerns, [the] Fed and other central banks" and are awaiting fresh
incentives in a market that is getting 'boring,' said Tom Lee,
managing partner at Fundstrat Global Advisors, in a note.
Read:The stock market is caught deep inside 'no man's land'
(http://www.marketwatch.com/story/the-stock-market-is-caught-deep-in-no-mans-land-2016-10-20)
Alphabet (GOOGL) (GOOGL) is expected on Thursday to report
third-quarter earnings of $8.63 a share on revenue of $17.99
billion, according to a FactSet survey of analysts. Google's parent
company posted earnings of $7.21 a share on revenue of $15.03
billion in third quarter 2015.
Apple (AAPL) is projected to post fiscal fourth-quarter earnings
per share of $1.66, down from $1.88 in the year-earlier period.
Revenue is also forecast to shrink to $46.99 billion from $50.98
billion, largely as sales of iPhones drop off.
Another Apple earnings decline would be the company's third in a
row, said John Butters, senior earnings analyst at FactSet. Apple
has scheduled its earnings release for Tuesday.
Still, with corporate results the main driver of stock prices in
recent sessions, earnings beats from the two Silicon Valley
behemoths could go a long way toward bolstering investor
confidence.
Read:Is it finally time for the inflation trade?
(http://www.marketwatch.com/story/is-it-finally-time-for-the-inflation-trade-2016-10-21)
Investors have reacted positively to earnings this month, with
the average stock up 0.86% following earnings release, according to
Bespoke Investment Group. If that trend holds, this quarter's
reporting period could be among the strongest in the current
seven-year bull market.
As of Friday, with 23% of S&P 500 components having
reported, 78% of the companies have turned in earnings above mean
estimates and 65% have beat median sales expectations, according to
FactSet.
The broader market could use the help. The S&P 500 moved
within a 24-point range all week and is in desperate need of a game
changer.
"Short-term momentum has improved slightly week over week and
breadth is oversold by some measures, giving next week a bullish
bias," said Katie Stockton, chief technical strategist at BTIG.
"However, the election has created some level of uncertainty that
could keep the S&P 500 range-bound until mid-November.
Read:Something else to blame on Trump and Clinton: Low
stock-market volume
(http://www.marketwatch.com/story/something-else-to-blame-on-trump-and-clinton-low-stock-market-volume-2016-10-21)
The key, said the strategist, is whether the large-cap index can
overcome expected selling pressure as it nears its 50-day moving
average of 2,160.
"A breakout above it would be a positive short-term technical
catalyst," she said.
The S&P 500 rose 0.4% for the week to close at 2,141.16.
Lee, meanwhile, is predicting a year-end rally after the current
headwinds--including the presidential election and the profit
recession--resolve in favor of the market.
Downbeat sentiment is also a good sign, said Lee, noting that
extreme bearishness is viewed as a contrarian buy signal.
"Sentiment is so bearish [that] it's bullish," he said.
The Dow Jones Industrial Average ended the week mostly flat at
18,145.71 and the tech-laden Nasdaq Composite posted a weekly gain
of 0.8% to 5,257.40.
(END) Dow Jones Newswires
October 22, 2016 08:00 ET (12:00 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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