Stocks Rally on Strong Earnings Reports

Morning Markets

June S&P 500 futures this morning are up +0.80% at a 1-1/2 week high.  U.S. stock indexes are moving higher today, boosted by strong corporate earnings results.  Tesla is up by more than +7% in pre-market trading after reporting stronger-than-expected Q1 earnings, and airline stocks are climbing in pre-market trading after the CEO of American Airlines said air travel demand is the strongest he has seen in 30 years.  Q1 quarterly earnings results thus far are positive for stocks, with 80% of the 83 S&P 500 companies that have reported earnings beating estimates. 

U.S. weekly initial unemployment claims fell -2,000 to 184,000, showing a slightly weaker labor market than expectations of a decline to 180,000.

The U.S. Apr Philadelphia Fed business outlook survey fell -9.8 to 17.6, weaker than expectations of 21.4.

The Euro Stoxx 50 index today rallied to a 2-week high and is up by +1.42%.  Gains in travel and leisure stocks are leading the overall market higher today after the CEO of United Airlines Holdings said that the demand environment is the “strongest it’s been in my 30 years in the industry.” Strength in corporate earnings results is also pushing the overall market higher after Nestle SA, and ABB Ltd reported better-than-expected quarterly earnings results.  European stocks also found support after Eurozone Mar CPI was unexpectedly revised lower.

ECB President Lagarde said the war in Ukraine creates risks of regional spillovers that could negatively affect Eurozone financial markets, and "in the short run, inflationary risks are tilted to the upside."

ECB Vice President Guindos said the ECB should be able to phase out asset purchases in July to pave the way for an interest-rate increase as early as that month.

The March Eurozone CPI was revised downward to +7.4% y/y from the previously reported +7.5% y/y.  The March Eurozone core CPI was revised slightly lower to +2.9% y/y from the previously reported +3.0% y/y.

Asian markets today settled mixed.  China’s Shanghai Stock Index tumbled to a 1-month low and closed down by -2.26%, and Japan’s Nikkei Stock Index climbed to a 2-week high and closed up by +1.23%.  Chinese stocks sold off today on concern that pandemic lockdowns will undercut economic growth.  Chinese President Xi Jinping defended China’s Covid-Zero strategy today, signaling those pandemic lockdowns and restrictions across China will continue. Chinese stocks were already on the defensive from Wednesday after the PBOC refrained from cutting interest rates.

Japanese stocks rallied today after the government upgraded its monthly economic assessment in April, its first increase in four months.  Japan’s Cabinet Office today said the economy is showing signs of picking up as the impact of the pandemic eases.  It boosted its assessment of consumption and public spending.  Asian semiconductor stocks also rose today after ASML Holding NV, the world’s largest semiconductor equipment maker, said on Wednesday that it plans to raise its forecasts later this year as demand for its chip-making machines outstrips supply. 

Pre-Market U.S. Stock Movers

Tesla (TSLA) jumped nearly +7% in pre-market trading after it reported Q1 adjusted EPS of $3.22, well above the consensus of $2.27. 

Airline stocks are climbing in pre-market trading after United Airlines Holdings forecasted a profit for this year, and the CEO said that the demand environment is the “strongest it’s been in my 30 years in the industry.”  As a result, American Airlines Group (AAL) is up more than +10%, United Airlines Holdings (UAL) is up more than +8%, Alaska Air Group (ALK) is up more than +4%, and Southwest Airlines (LUV) and Delta Air Lines (DAL) are up more than +3%.   

Union Pacific (UNP) rose more than +1% in pre-market trading after reporting Q1 EPS of $2.57, better than the consensus of $2.53.

AT& T (T) gained +1% in pre-market trading after reporting it added 691,000 regular monthly phone subscribers in Q1, well above the consensus of 437,000.

Alcoa (AA) tumbled rose more than -5% in pre-market trading after reporting Q1 sales of $3.29 billion, weaker than the consensus of $3.44 billion.

Netflix (NFLX) fell more than -1% in pre-market trading, adding to Wednesday’s -35% plunge after announcing a surprise decline in subscribers in Q1.

Equifax (EFX) sank nearly -10% in pre-market trading after it cut guidance on full-year adjusted EPS to $8.00-$8.30 from a prior forecast of $8.50-$8.80.

Twitter (TWTR) fell -by 2% in pre-market trading after Truist Securities downgraded the stock to hold from buy.

Today’s U.S. Earnings Reports (4/21/2022)

Alaska Air Group Inc (ALK), American Airlines Group Inc (AAL), AT&T Inc (T), Danaher Corp (DHR), Dover Corp (DOV), Dow Inc (DOW), FirstEnergy Corp (FE), Freeport-McMoRan Inc (FCX), Genuine Parts Co (GPC), Huntington Bancshares Inc/OH (HBAN), Intuitive Surgical Inc (ISRG), KeyCorp (KEY), Marsh & McLennan Cos Inc (MMC), NextEra Energy Inc (NEE), Nucor Corp (NUE), Pentair PLC (PNR), Philip Morris International In (PM), Pool Corp (POOL), PPG Industries Inc (PPG), Quest Diagnostics Inc (DGX), Snap-on Inc (SNA), SVB Financial Group (SIVB), Tractor Supply Co (TSCO), Union Pacific Corp (UNP).