Top Story
Earnings Help Investors Shrug Off Rate Hike and GDP Reading
• US stocks rose Friday, driven higher by upbeat earnings from big tech companies. Both Apple (AAPL) and Amazon (AMZN) beat analyst expectations, giving broader indexes a boost. So far, these reports seem to be part of a trend. According to data from Factset, over half of S&P 500 companies have reported earnings, with 72% of those names beating expectations.
• These corporate reports helped investors look past a string of somewhat more concerning issues. Inflation is still running at historic highs, there are geopolitical concerns boiling in Eastern Europe and Taiwan, the Federal Reserve hiked rates by another 75 basis points, and US GDP growth slowed for a second consecutive quarter. The takeaway is that despite markets being in the green, Wall Street is still somewhat unsettled by wide ranging uncertainty.
What to Be on the Lookout for Today
• The US manufacturing sector will be in focus with two key data points set for release. First up will be S&P Global’s final print of July manufacturing PMI. The initial flash reading showed the first contraction in business activity in two years. The July ISM manufacturing index is also due. In June the reading fell more than 2%, month-over-month.
• May’s construction spending is due. The category is considered a good way to check the overall health of the economy. In April construction spending increased 12.3% year-over-year.
• Video game giant Activision Blizzard (ATVI) is among the companies reporting earnings. Last week an analyst at research firm MoffettNathanson made the case that Microsoft’s (MSFT) acquisition of Activision Blizzard will eventually receive regulatory approval. The deal was first announced in January. Also, watch for insurance titan Aflac (AFL) to post earnings.
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A Few Headlines That Should Be on Your Radar
What does the smiley face symbol have to do with your upcoming vacation? Plenty, if Booking.com has anything to say about it. The week ahead on Wall Street also features the latest results from Starbucks as they’ve announced some store closures — citing employee safety. And how is DraftKings changing its season-long $1 million pick’em contest? It’s all included in what’s another busy earnings calendar. Read more >> A recent trademark filing from TikTok parent ByteDance suggests music streaming is the company’s next target. Hundreds of songs used in TikTok videos received over 1 billion views last year. Nearly as many crossed over from going viral on TikTok to charting on the Billboard Top 100. Apple (AAPL) Music and Spotify (SPOT) could be in the crosshairs due to an area where TikTok already succeeds. Read more >> Despite a somewhat frozen market for initial public offerings, Instacart is eying an IPO before the end of 2022. Over 300 other companies are watching and waiting on the IPO sidelines. A failed IPO could keep the market cool until next year. But here’s why a successful public offering from Instacart could open the floodgates and lead to other firms following suit. Read more >> If you’re worried about what would happen to your money during a recession, read this advice on protecting your finances in a bad economy. These five steps can help you prepare for any type of economic slowdown, now and in the future. Read more >>Not-So-Breaking News
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Both Chevron (CVX) and ExxonMobil (XOM) obliterated their previous quarterly profit record during the second quarter, all while consumers continue to struggle with soaring energy prices. The price of oil and natural gas have both spiked since Russia’s invasion of Ukraine, helping drive inflation to its highest level in over 40-years.
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Apple (AAPL) beat analyst expectations on the top and bottom lines during its fiscal third quarter. The iPhone maker did report slower growth with CEO Tim Cook citing “pockets of softness,” while predicting revenue would accelerate.
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Ecommerce giant Amazon (AMZN) exceeded analyst expectations for both sales and profit during the second quarter. The company said it's making progress in terms of controlling costs, and delivered upbeat guidance for the third quarter.
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Meta Platforms’ (META) Instagram is reversing course and undoing some changes made to its layout following complaints. High profile celebrity sisters Kim Kardashian and Kylie Jenner had blasted the test version as being too similar to TikTok. Meta reported earnings last week that missed on both the top and bottom lines.
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Roku (ROKU) saw its share price crater to end last week after falling short of expectations. The company also warned of “recessionary fears.” Roku contends the advertising market will struggle in the current quarter.
Financial Planner Tip of the Day
"If you are leaving a job with an employer-sponsored retirement plan, you can roll over your 401(k) into an IRA to potentially give yourself better investment options and lower fees. Before doing so, review the options and fees of your 401(k) to make sure it makes sense."
Brian Walsh, CFP® at SoFi