Earnings at Full Steam, Tesla Jump-starts Big Tech Reporting

26 Apr 2021 · 3rd Party Analysis

Earnings at Full Steam, Tesla Jump-starts Big Tech Reporting

WRITTEN BY ThorFX

In Summary

  • US stocks trade near record highs, ending Tuesday slightly lower
  • Equity futures on Wednesday trade mixed

Earnings at Full Steam, Tesla Jump-starts Big Tech Reporting

The earnings season is now in full swing as this week’s reports are about to dominate the headlines. More than one-third of the companies in the broad-based S&P500 are set to reveal their financial results for the first quarter as the earnings season accelerates.

The top six largest companies leading the benchmark index will rev up the week. Tesla kicks off on Monday, followed by Amazon, Microsoft, Apple, Google-parent Alphabet, and Facebook. A total of 180 companies in the S&P500 will present their first-quarter results this week, after 25% of the index already reported through Friday.

Of the tech giants that will narrate the earnings this week, Tesla released first-quarter delivery numbers that exceeded expectations. The Silicon Valley car company delivered nearly 185,000 electric vehicles from January through March.

On Tuesday, Microsoft and Alphabet will release their results in after-hours trading. Microsoft has enjoyed strong demand for its cloud-computing services during the lockdowns around the world and, as a result, posted record quarterly revenue for the fourth quarter of 2020. Alphabet logged a record revenue at $56.9bn in the holiday quarter, driven by increased ad spending. Also on Tuesday, Visa and Starbucks deliver their earnings results.

Apple kickstarts the big tech reporting on Wednesday. The iPhone maker recorded its most profitable quarter October through December last year, boosted by the rollout of the 5G network and the iPhone 12. Facebook is also set to report on Wednesday. The fourth quarter resulted in record revenue for the social media company but also increased friction with Apple over privacy concerns. Wednesday also brings the quarterly results of Spotify, Ford Motor, Boeing, and Qualcomm.

Week to Close off With Big Name Reports

Amazon, on Thursday, is expected to surge above $100bn in revenue and mark the second consecutive quarter over that milestone. The tech giant benefited strongly from the pandemic as consumers flocked to online shopping and businesses piled on its cloud-computing business for servers and software. Mastercard, Comcast, and Caterpillar will also report on Thursday.

Friday kicks off with financial figures of energy companies such as Exxon Mobil and Chevron Corp. The energy giants’ reports will detail how the uneven global reopening has affected their business following the decreased demand for fossil fuels in the previous year.

The corporate earnings season that has been unfolding for the past couple of weeks has vastly exceeded estimates. Roughly a quarter of the S&P500 companies have reported profits higher by an aggregate of 33.7% for the first quarter of 2021. Compared with the 15.7% that was projected near the end of last year, so far, the results are double the expectations.

Stock futures on Monday point to a quiet opening later today. S&P500 futures, Dow Jones futures, and Nasdaq futures are steady in the pre-market hours, following a late-week rally. On Friday, the major

indexes shot up to mark a solid increase after stocks wobbled throughout the week and pulled away from their all-time highs. On Friday stocks gained but declined for the week. The S&P500 moved higher by 1.09%, while the Dow Jones advanced 0.67%. The Nasdaq Composite gained 1.44%.

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