S&P 500 Closes in on Record Highs on Strong Earnings

Today was the beginning of peak earnings season and investors were not disappointed at all.  Stocks ripped higher after a plethora of companies from a wide range of sectors mostly reported strong results.

The Good:

Nucor, the nation’s top steel producer delivered a beat with the top and bottom line and their guidance was good enough to warrant a 3% rally.

United Technologies is higher by 2.4% after showing strength in the aero space market, similar to Honeywell.  UTX also raised their guidance, helping the stock post its best gain in three months.

Coca-Cola is also higher by 1.4% after delivering a clean beat on both the top and bottom line.  The full-year guidance was affirmed with the outlook for Q2 seeing 7% headwinds with operating income.

Twitter, the social media company giant is up by 15%, after beating expectations and delivering robust user growth.  This could be a positive sign for other social media companies, such as SNAP and Facebook.

The not so Bad:

Verizon is down 2.1%, off the lows after delivering soft subscriber gains.  The numbers were a slight miss and that may be attributed to their decision to not offer many promotions like their competitors.  Verizon did raise their EPS guidance and analysts maintain 13 buys and 21 holds with an average price target of $60.

Procter & Gamble is lower by 3.3% after some of their businesses struggled.  High-end beauty products and home-care goods had higher costs which did not derail the consumer.

The S&P 500 is up 0.8%, rising above their prior record closing levels.  Even the drop in share prices of both Verizon and Procter & Gamble paint a story of a strong US consumer.  The broad index is benefiting from a good start to peak earnings season, trade deal optimism between China and the US, and a patient Fed, with peers, such as the PBOC and ECB likely to provide more stimulus in the coming months.   If we do see stocks continue to the move higher, key resistance may come from the 2,970 area.

The US dollar is also higher on the session by 0.4% as investors increase their US stock holdings.  The yield on the 10-year US Treasury note is down 2.0 basis points to 2.569%.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya