Underperforming companies trailed the overall market by just 1.7%, the least negative response in eight quarters, as many companies reported taking steps to adapt to the changing business environment.
“With many companies announcing restructuring efforts and cost-cutting plans, investors believe they can weather slowing economic growth,” said Wendy Sun, senior associate analyst at Bloomberg Intelligence. It helps build confidence that it can be done,” he said. “So we’re seeing the stock price higher this time around than before.”
not as bad as i feared
Next week’s report from the mega-capped tech company comes on the heels of disappointing forecasts from Microsoft Corp and Intel Corp this week.
On Friday, Intel fell more than 7% after forecasting one of its worst quarters in history, beating other semiconductor stocks.
But Microsoft’s warnings about slowing sales had far less impact on the stock, despite the outlook.
So far, the biggest gainers in post-earnings results are Silicon Valley Bank’s parent company, SVB Financial Group, and US food processor Lamb Weston Holdings. Financial services firm Northern Trust and investment bank Goldman Sachs were the worst losers.
Overall, though, investors using options to bet on post-earnings gains are performing their best in years, underscoring a more bullish mood. According to data compiled by Goldman Sachs, traders who bought single-share call his options five days before this season’s earnings release saw an average return of 29%. amount paid to). .
This week’s results coincide with the first interest rate decision of the year announced by the Federal Reserve on Wednesday.
The central bank is widely expected to raise interest rates by half a percentage point, but investors are looking for signals that monetary policy tightening will soon stop. Speculation about such a pause has paid off enormously this year as growth stock valuations are more sensitive to changes in interest rates.
So far, U.S. companies have marginally beat earnings estimates from the previous quarter. This could mean that his Wall Street forecast for the last three months last year was relatively pessimistic. About 72% of companies posted better-than-expected earnings in the fourth quarter, up from 70% in the third quarter but down from 76% in the same period last year, according to data compiled by Bloomberg Intelligence.
Advisors Asset Management CEO Scott Collier said: “For now, investors are expecting the Fed to end its challenge at its next meeting, and the market expects that to be the end of the cycle. We expect a rate hike,” he said.
“But depending on what management says about their outlook, the next tech earnings could change the current market environment, but the Fed’s moratorium on rate hikes may not come until later this year. not.”