RBC’s Calvasina says potential earnings reviews pose a risk in the second half
This earnings season, results have generally come in above Wall Street expectations, indicating that companies are doing better in current economic conditions than analysts had hoped, RBC head of US equity strategy Laurie Calvasina wrote in a note Wednesday.
“The good news for the US stock market is that evidence of resilience in corporate earnings continues to emerge,” Calvasina said. “The bad news for the US stock market is that the possibility of further downside earnings revision remains risky as we go deeper into the second half of the year.”
So far, earnings and revenue estimates are down for the second half of 2022 and for the whole of 2023.
However, the strength of corporate earnings this quarter may indicate that any upcoming economic downturn will be short and shallow, according to Calvasina. That’s fine for stocks now, but it could make them vulnerable to more volatility.
“This has been supportive of stock prices over the past few weeks, but going forward, it also tells us that the rally in stocks is fragile given the potential for further downward revisions to earnings as 2023 approaches,” she said.
– Carmen Renick
CVS Gains On Earnings Beat
Pelosi leaves Taiwan
House Speaker Nancy Pelosi left Taiwan on Wednesday after a visit that raised tensions with China and shook financial markets slightly.
Pelosi Taiwan President Tsai Ing-wen met on Wednesday. China, which considers the disputed island part of its territory, has increased military exercises in the Taiwan Strait amid its visit. The S&P 500 is down about 1% this week as traders worry about the implications of Pelosi’s trip on relations with China. But the market was poised for some comfortable rally on Wednesday after its departure.
– John Milloy
AMD shares decline due to poor revenue guidance
AMD shares traded 5% lower in the primary market after the chip maker released third-quarter revenue Guidance was lower than analysts’ expectations.
AMD said it expects revenue of $6.7 billion for the third quarter, below Refinitiv’s forecast of $6.82 billion.
The disappointing guidance overshadowed better-than-expected earnings and revenue for the second quarter.
European markets were mixed as cautious sentiment persisted; Avast up 42%
European stocks It was mixed on Wednesday, with the cautious regional trend continuing this week.
pan europe Stokes 600 It slipped 0.2% in early trade, with autos down 1.5% while technology shares rose 1.2%.
It’s a profitable day in Europe, with Commerzbank, SocGen, BMW, Banco BPM, Siemens Healthineers, Veolia and Wolters Kluwer among the companies reporting before the bell.
Shares of Czech cybersecurity company Avast surged 42% after the UK’s competition regulator temporarily authorized its $8.6 billion sale to its US counterpart. Norton Live Look.
Focus on the data, not what Fed speakers say, says Art Hogan
Despite the “Fed Speakers Review,” that’s not what investors should focus on, according to Art Hogan, chief market strategist at B. Riley Financial.
“I think investors should pay more attention to what the data is telling us than every single speaker at the Fed, whether they are voters or not, should be saying what our expectations should be,” Hogan told CNBC. Asia.”
However, he said that Fed officials were able to shift expectations of where Fed policy is heading.
Louis Federal Reserve Chairman James Bullard said Tuesday that the central bank will need to keep raising interest rates, The federal funds rate will likely increase to 3.75%-4% by the end of 2022. Mary Daley, president of the Federal Reserve Bank of San Francisco, said that “our work is not done yet” in the fight against inflation, While Chicago Fed President Charles Evans said another rate hike is possible, although he hopes to avoid it.
After last week’s meeting, some expected the Fed to continue rising to 3.25%-3.5% before pivoting in 2023, Hogan said.
“I think this week’s parade of Fed speakers has done a very good job of undoing that, and lowering those expectations,” he said.
– Abigail Ng
Jefferies says these stocks are poised to return if inflation peaks
A slowdown may be on the horizon, and a further drop in the earnings rating is expected going forward. If inflation peaks, as some analysts expect, Jefferies says, this combination of factors will favor one class of stock.
Jefferies has produced a screen of such stocks that investors can buy, based on a list of metrics that include high profitability, reasonable valuations and good cash flow. Professional subscribers can read the story here.
– Weezin Tan
PayPal soars on earnings and stock buyback announcement
PayPal shares rose more than 11% after hours. Payments company Beat analyst earnings and revenue estimates for the second quarter and issued optimistic guidance for the full year. PayPal also announced a $15 billion share buyback program.
Share buybacks provide a way for companies to increase their earnings per share and enhance the value of their shares, Especially while the market in all areas suffers from sharp drops in prices this year. The company started a $10 billion program four years ago.
Elliott Management said it has a $2 billion stake in the payments giant. PayPal announced that it has entered into an agreement to share information on value creation with the activist investor.
– Tanaya Michel
Despite Fed Talk About Fighting Inflation, ‘Easing Cycle’ Is Emerging, Says Jim Poulsen of Leuthold
Leuthold Group chief investment analyst Jim Poulsen said that despite the Fed’s “continuous rants toward fighting inflation” through monetary tightening, there are several factors that suggest the market may be entering an “emerging easing cycle”.
He said in a note to investors late Tuesday that bond yields have made a significant cut in interest rates, the dollar is finally rolling in and unwanted spreads have eased.
“The media, policy officials and investors are primarily focused on the fight against inflation and how aggressively the Fed will need to keep raising rates,” Paulsen said. “However, with real economic growth already falling to a crawl and evidence mounting that inflation is abating, the case for further Fed tightening at its September meeting is rapidly collapsing.”
“Investors should put appropriate weight on the pioneering nature of economic policies,” he added. “Tightening today means lower real and nominal growth tomorrow.”
– Tanaya Michel