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Tuesday, April 23rd, 2024

As Q1 earnings season rolls along, market outlooks seem sunnier. For one thing, we’re not seeing many bleak, bad misses from companies yet reported; if anything, we’ve been pleasantly surprised by results from big Wall Street banks, major manufacturers, etc. We’re just starting to see companies in Tech reporting for calendar Q1, but even there we are “so far, so good.” The Dow is +110 points at this hour, the S&P 500 is +20 and the Nasdaq +75 points. This follows a solid day in the green across the board.

Economic prints are coming in slowly this week. After today’s open, we’ll see S&P flash PMI results on both Services and Manufacturing for the month of April. Expectations for both are currently 52.0 — a slight uptick from the previous 51.7 in Services and 51.9 in Manufacturing a month ago. And importantly, these figures remain north of the 50 threshold, which is the tipping point between gains and losses. Elsewhere, we’ll get New Home Sales for March: expected at 669K from 662K the prior month.

The big economic report for the week comes out Friday. This will be the Personal Consumption Expenditures (PCE) report for March, which is expected to come in-line with the previous month, slightly up year over year, and slightly down on core year over year. When the Fed talks about not being satisfied that inflation metrics are suitably driven from our economy as of now, it’s the PCE they are most clearly referencing. Fed Chair Jerome Powell himself name-drops PCE data during his Q&A periods following Fed meetings.

Ahead of today’s open, General Motors GM is out with Q1 results. The “Big 3” automaker posted a +26% earnings beat — $2.62 per share versus $2.08 expected (and $2.21 in the year-ago quarter) — on a +4.2% top-line outperformance, to $43.01 billion (nicely ahead of the $39.99 billion a year ago). Further, the maker of Chevrolets, Cadillacs and Buicks, etc. has upgraded forward guidance, citing a mixed outlook for its EV offerings. Shares are up +4% on the release, adding to the +20% year to date. For more on GM’s earnings, click here.

Delivery and logistics giant United Parcel Service UPS posted mixed results for its Q1 this morning. The company estimates by a solid dime on earnings to $1.43 per share, while coming up a tad short on the top line: $21.71 billion versus $21.91 billion in the Zacks consensus. It laid off 12K workers in the quarter as business has softened; competitor FedEx had posted similar results in its most recent earnings report. Even though UPS only has one earnings miss in the past five years, shares are down -1.2%, adding to the -8% year to date.

PepsiCo PEP, another read on consumer appetite, posted strength on both top and bottom lines before today’s opening bell. Earnings of $1.61 per share outpaced the $1.52 expected (and the $1.50 per share reported a year ago) for a +5.9% beat, while revenues of $18.25 billion narrowly improved over the Zacks consensus by +0.62%. It’s the fourth straight earnings beat, and third revenue beat in the past four quarters in sales. Yet shares are down -0.3% in today’s pre-market, despite its China business improving. For more on PEP’s earnings, click here.

Spotify SPOT surpassed estimates on both top and bottom lines this morning. Earnings of $1.05 per ADR (Spotify is headquartered in Stockholm, Sweden) easily trounced the 63 cents expected, and is finally turning a profit after years of negative earnings. This amounts to a +66.67% positive surprise, on $3.95 billion in sales, +2.05% from the Zacks consensus and notably improved from $3.26 billion reported a year ago. The stock is ramping up another +7% in the pre-market, +45% year to date and +107% over the past year. For more on SPOT's earnings, click here.

After today’s close, Tesla TSLA comes out with Q1 earnings. Market participants are bracing for one of the worst quarters from the EV leader in recent memory, and the stock continues to carry a Zacks Rank #5 (Strong Sell) and a Value-Growth-Momentum score of F. We’ll also hear from Visa V and Texas Instruments TXN on earnings after the bell sounds this afternoon.

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