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Stocks Climb on Strength in Mega-Cap Tech Earnings

Barchart - Wed Jul 27, 8:04AM CDT
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Morning Markets

September S&P 500 futures (ESU22) this morning are up +0.87%.  Better-than-expected quarterly earnings results from mega-cap technology companies are boosting stock indexes this morning.  Alphabet is up +4% in pre-market trading after reporting stronger than expected Q2 advertising revenue, and Microsoft is up +4% after saying it expects double-digit sales growth for the fiscal year 2023.  Also, Texas Instruments is up more than +3% after forecasting stronger than expected Q3 revenue.

Stock indexes maintained moderate gains after this morning’s data showed U.S June core capital goods orders, a proxy for capital spending, rose more than expected.

The markets fully expect the Fed to raise its federal funds target range by 75 bp after today’s FOMC meeting.  The markets will then turn their attention to the post-FOMC meeting comments from Fed Chair Powell to see if the Fed will maintain its aggressive stance of monetary tightening.

U.S. June capital goods new orders nondefense ex-aircraft, a proxy for capital spending, rose +0.5% m/m, stronger than expectations of +0.2% m/m.

U.S. June wholesale inventories rose +1.9% m/m, stronger than expectations of +1.5% m/m.

The Euro Stoxx 50 is up +0.66% today.  Strength in European bank stocks is lifting the overall market today after Credit Suisse Group AG replaced its CEO and said it would embark on a new turnaround plan. Also, UniCredit SpA jumped +7% after reporting Q2 profit that almost doubled consensus and boosted its full-year earnings estimate.  However, concern that an energy crisis in Europe could spark a recession is limiting gains in the overall market as European nat-gas prices jumped another +10% today to a 4-1/2 month high after Russia’s Gazprom PJSC cut gas flows to Europe through the Nord Stream pipeline to around 20% of normal capacity. 

Eurozone June M3 money supply rose +5.7% y/y, stronger than expectations of +5.4% y/y

German Aug GfK consumer confidence fell 2.9 to a record low -30.6 (data from 2005), weaker than expectations of -28.9.

China’s Shanghai Composite Index today closed down by -0.05%.  Today's weakness in Chinese property stocks weighed on the overall market after Country Garden’s share placement plan sparked concerns about a liquidity crunch for the sector.  Also, Chinese suppliers of Adidas declined after the German shoe company cut its full-year guidance on a slower recovery in China.  Trading activity in Asian markets was muted ahead of the results of today’s FOMC meeting.

China June industrial profits rose +0.8% y/y, the first increase since March.

Japan’s Nikkei Stock Index closed up by +0.22%.  Japanese stocks recovered from early losses and moved slightly higher as Japanese chip stocks rallied after South Korean chipmaker SK Hynix said it would significantly adjust its 2023 capital spending, which could limit declines in chip prices.  Gains in the overall market were limited after Shimano tumbled -6% when it reported Q2 operating profit below consensus and indicated that bicycle demand is moderating. 

Pre-Market U.S. Stock Movers

Alphabet (GOOGL) jumped +4% in pre-market trading after reporting Q2 advertising revenue of $56.29 billion, above the consensus of $55.91 billion.  Other mega-cap tech stocks rallied on the news, with Amazon.com (AMZN) and Nvidia (NVDA) up more than +2% and Apple (AAPL) up more than +1%.  

Microsoft (MSFT) rose more than +4% in pre-market trading after reporting Q4 commercial cloud revenue of $25.00 billion, better than the consensus of $24.99 billion, and said it expects double-digit sales growth for the fiscal year 2023. 

Texas Instruments (TXN) climbed nearly +3% in pre-market trading after reporting Q2 revenue of $5.21 billion, stronger than the consensus of $4.55 billion, and forecast Q3 revenue of $4.90 billion-$5.30 billion, the midpoint above the consensus of $4.94 billion.

Enphase Energy (ENPH) surged more than +10% in pre-market trading after reporting Q2 revenue of $530.2 million, above the consensus of $505.9 million, and forecasting Q3 revenue of $590 million-$630 million, stronger than the consensus of $551.2 million.

Chipotle Mexican Grill (CMG) jumped more than +8% in pre-market trading after reporting Q2 adjusted EPS of $9.30, better than the consensus of $9.09. 

Boeing (BA) gained more than +2% in pre-market trading after reporting Q2 operating cash flow of +$81.0 million, better than the consensus of negative -$342.7 million.

Hilton Worldwide Holdings (HLT) rallied more than +6% in pre-market trading after reporting Q2 adjusted EPS of $1.29, above the consensus of $1.05, and raising its full-year projections for adjusted EPS to between $4,21-$4.46 from previous guidance of $3.77-$4.02.   

Tempur Sealy International (TPX) fell more than -3% in pre-market trading after reporting Q2 net sales of $1.21 billion, weaker than the consensus of $1.27 billion. 

Shopify (SHOP) tumbled -7% in pre-market trading after reporting a Q2 adjusted EPS loss of -3 cents a share, wider than the consensus of a +2.6 cent increase, and said it expects Q3 adjusted operating loss to materially increase over Q2.

Sherwin-Williams (SHW) plunged -10% in pre-market trading after reporting Q2 adjusted EPS of $2.41, weaker than the consensus of $2.78, and cutting its full-year adjusted EPS forecast to $8.50-$8.80 from a prior view of $9.25-$9.65, well below the consensus of $9.42.

Today’s U.S. Earnings Reports (7/27/2022)

Align Technology Inc (ALGN), American Electric Power Co Inc (AEP), American Water Works Co Inc (AWK), Amphenol Corp (APH), Automatic Data Processing Inc (ADP), AvalonBay Communities Inc (AVB), Avery Dennison Corp (AVY), Boeing Co/The (BA), Boston Scientific Corp (BSX), Bristol-Myers Squibb Co (BMY), CH Robinson Worldwide Inc (CHRW), Cincinnati Financial Corp (CINF), CME Group Inc (CME), Cognizant Technology Solutions (CTSH), Duke Realty Corp (DRE), Equinix Inc (EQIX), Etsy Inc (ETSY), Everest Re Group Ltd (RE), Ford Motor Co (F), Fortune Brands Home & Security (FBHS), Garmin Ltd (GRMN), General Dynamics Corp (GD), Genuine Parts Co (GPC), Globe Life Inc (GL), Hess Corp (HES), Hilton Worldwide Holdings Inc (HLT), Hologic Inc (HOLX), Humana Inc (HUM), Invesco Ltd (IVZ), Kraft Heinz Co/The (KHC), Lam Research Corp (LRCX), Lamb Weston Holdings Inc (LW), Meta Platforms Inc (META), Mid-America Apartment Communities (MAA), Molina Healthcare Inc (MOH), Norfolk Southern Corp (NSC), Old Dominion Freight Line Inc (ODFL), O'Reilly Automotive Inc (ORLY), Otis Worldwide Corp (OTIS), PTC Inc (PTC), QUALCOMM Inc (QCOM), Raymond James Financial Inc (RJF), Rockwell Automation Inc (ROK), Rollins Inc (ROL), ServiceNow Inc (NOW), Sherwin-Williams Co/The (SHW), TE Connectivity Ltd (TEL), Teledyne Technologies Inc (TDY), T-Mobile US Inc (TMUS), Tyler Technologies Inc (TYL), United Rentals Inc (URI), VICI Properties Inc (VICI), Waste Management Inc (WM).



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