Earnings season is upon us once again. With most of the big companies announcing their results this month, we can see a few trends that have happened during the year. Earnings season can present an opportunity for stock prices to be pumped, however lately we have seen a number of negative signals that have started to weigh on investor sentiment.
There have been concerns over inflation, as well as supply chain disruptions resulting in most US stock index futures continuing to flatline. However, we have seen some quite excellent earnings reports, such as Netflix, which has seen a larger than expected increase in customers due to its hit show ‘Squid Game’.
However, investors are worried about higher costs for companies, with prices expected to be raised in the not too distant future. A typical example is Procter and Gamble, the US consumer goods firm, which is facing a huge $2.3 billion in added expenses when compared to the $1.9 billion it spent last year. Supply chain issues are also expected to affect the production of the iPhone 13 unit for Apple, with a considerable 10 million fewer units to be produced this year.
Stocks and Shares Performance
Presently, there remains the assumption that sales are still good despite supply chain problems. This is helping to stem fears of reduced economic growth. However, the Evergrande issue appears to be taking a darker turn; with another possible default next week, all hell would break loose if this were to occur.
United Airlines reported a smaller than expected loss for the July-September period as travel continues to pick up alongside a larger takeup of Covid-19 vaccines
Verizon Communications also reported a considerable subscriber increase in Q3. This was largely due to continued demand for the company’s 5G service. Conversely, Baker Hughes missed Wall Street’s Q3 earnings expectations with the stock suffering a 1.2% decrease on Wednesday’s pre-market trading.
Abbott Laboratories also saw a substantial boost in its sales figures. This was largely due to a rebound in sales of Covid19 diagnostic test kits as well as a strong performance from the group’s core business. Biogen also raised its earnings and revenue guidance for the year despite disappointing quarterly sales of its Alzheimer’s treatment Aduhelm.
In a controversial move, Facebook appears to be lining up a name change next week. This is being done to reflect the group’s various applications and also, its ‘metaverse’ project. This announcement was followed by its stock rising by 1% in pre-market trading yesterday.
Novavax stock was down by 15.6% in pre-market trading due to reported problems with the production of its Covid-19 vaccine. The company is reportedly facing production problems that include compliance with US FDA standards.
Were you surprised by the stock market rallies considering the macroeconomic environment? Let us know in the comments below.
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