Alphabet And Microsoft Lead Off The Heart Of Earnings Season

Key Takeaways

• Market turbulence continues; tech giants report amid rising interest rates.
• M&A reshaping industries; Chevron-Hess, Disney-Reliance deals redefine corporate landscapes.
• Cryptocurrency rally: Bitcoin surges, ETF approval on the horizon.

After fifteen consecutive Mondays of stocks closing higher, the streak finally came to an end yesterday. The S&P 500 was down 0.2%, closing at its lowest level since May; however, the Nasdaq eked out a small gain of 0.3%. The yield on the 10 year note briefly touched 5% for the first time since 2007 before pulling back to settle at 4.836%. However, earnings season kicks off in earnest today with Google
GOOG
parent Alphabet and Microsoft
MSFT
both reporting after the close.

This morning, Coca-Cola
KO
reported earnings that exceeded estimates and raised guidance; however the stock is unchanged. GE also raised guidance after reporting better than expected earnings, sending the stock higher by over 5% in premarket. 3M beat quarterly forecasts and raised full year guidance. In premarket, the stock is higher by 3.5%. Finally, GM also reported earnings; however, because of the ongoing UAW strike, the company declined to offer any forward looking guidance. The hope here is that some quality earning from more “traditional companies” like these, can help the market gain momentum. This could be especially true if the current market stalwarts can follow up with good earnings.

After the close tonight, Alphabet and Microsoft are both scheduled to report. For Microsoft, I’ll be interested to hear how they plan to integrate their recently completed acquisition of Activision
ATVI
Blizzard. I’ll also be curious to hear how their cloud services business is doing. When Alphabet reports, I’ll be listening for details about YouTube TV and ad selling revenues. Both companies are enjoying strong years with shares of Alphabet up nearly 57% and Microsoft up almost 38%.

A couple other stocks making news today include Chevron
CVX
and Disney. Chevron announced this morning that they will be acquiring rival Hess
HES
Corporation in a deal valued at $53B. Disney Corporation is also said to be in discussions to sell its India operations to Reliance Industries for somewhere between $7 and $10 billion.

Elsewhere, bitcoin is on the move, trading as high as $34,900 in premarket. It appears we’re inching closer to approval of a spot bitcoin ETF. That is welcome news for crypto traders, sending bitcoin to levels not seen since May of 2022.

Finally, I want to briefly return to earnings. These next two weeks will be filled with some of the biggest names scheduled to report. Stocks soared in the first half of the year but have struggled so far in the second half. The Nasdaq Composite is up less than 1% since the end of May. That follows a 24% gain in the first six months of the year. The S&P 500 gained nearly 9% through the first half of the year but is also up less than 1% since. Therefore, I think earnings and forward looking statements are going to take on a significant level of importance, especially in light of the geopolitical situation and rising interest rates. As always, I would stick with your investing plan and long term objectives.

tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.