Stock Market Futures Under Pressure Ahead Of Major Earnings Reports
Stock market futures are marginally lower in early morning trading on Wednesday after a record-setting session yesterday. The Dow and S&P 500 marked fresh records on Tuesday as investors continue to ride on the bullish waves stemming from the strong third-quarter earnings season. If anything, the latest batch of earnings results reassured investors that many companies have been able to manage inflation and supply chain worries and continue delivering estimates-topping sales and profits.
“We see signs that there could be more gains to come in the final two months of the year. Seasonal tailwinds, improving market internals, and clear signs of a peak in the Delta variant all provide potential fuel for equities heading into year-end, and we maintain our overweight equities recommendation as a result.”- Ryan Detrick, chief market strategist for LPL Financial.
Meanwhile, Robinhood (NASDAQ: HOOD) tumbled in the pre-market trading today after reporting a wider quarterly loss and lower-than-expected sales. The revenue fell short of Wall Street estimates as cryptocurrency transactions plunged from the previous quarter. Separately, economic data on tap today include U.S. durable goods order due at 8.30 a.m. ET. As of 6:51 a.m. ET, the Dow, S&P 500, and Nasdaq futures are declining by 0.07%, 0.13%, and 0.16% respectively.
Advanced Micro Devices (AMD) Topped Q3 Estimates; Gives Another Bullish Forecast
Advanced Micro Devices (NASDAQ: AMD) reported third-quarter earnings that topped Wall Street’s estimates. Revenue for the quarter came in 54% higher year-over-year to $4.3 billion. Meanwhile, the company reported net income of $923 million, representing an increase of 137% from the same period last year. What’s more, the company went ahead to provide a strong forecast for the fourth quarter. It is betting on its ability to overcome a weak supply chain to meet strong demand for chips used in gaming consoles and data center services.
“Semi-custom revenue grew sequentially and year-over-year as demand for the latest Microsoft and Sony consoles remains very strong. We expect semi-custom revenue to increase sequentially in the fourth quarter as we further ramp supply to address the ongoing game console demand.”- Lisa Su, President & CEO of AMD.
Last October, AMD announced its plans to buy Xilinx (NASDAQ: XLNX) in a deal worth $35 billion that would give the company more firepower to compete with Intel (NASDAQ: INTC) in the data center chip market. AMD said the deal was still on track to close by the end of 2021 and the company is making “good progress” in securing regulatory approvals. To date, AMD has received antitrust clearance in the U.S. and Europe, but is still waiting approval from China. Xilinx is slated to announce second-quarter earnings after the stock market closes today.
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Microsoft Smashed Earnings Expectations On Cloud Performance
Microsoft (NASDAQ: MSFT) stock could soar to a record high in the stock market today after it reported fiscal first-quarter earnings that exceeded analysts’ estimates Tuesday. From the fiscal report, the company’s revenue came in 22% higher year-over-year to $45.3 billion. That marks the fastest growth since 2018. More impressively, the company also posted its most profitable quarter with its profit soaring 48% to $20.5 billion.
The earnings were driven by success in Microsoft’s cloud-computing business, which includes Office 365 subscriptions and Azure. This shouldn’t come as a surprise as strong performance in this segment has often been the case in recent years. The company’s “Intelligent Cloud” segment, which includes Azure as well as on-premises server sales and other items, increased to sales of $16.96 billion from $12.99 billion a year ago. In comparison, analysts on average were expecting $16.57 billion, according to FactSet.
The result was more robust than Microsoft itself had predicted three months ago. The company’s finance chief, Amy Hood, called for Azure growth to be relatively stable. “We expect healthy broad-based growth in our Azure consumption business consistent with recent trends and our user business, while continuing to benefit from Microsoft 365 momentum to see a moderation of growth rates given the size of the install base,” she added. Given the impressive fundamentals, I won’t be surprised if MSFT stock continues to march higher in the long run.
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Ford’s Earnings On Tap After The Closing Bell Today
Ford (NYSE: F) is set to report its third-quarter results after the stock market closes today. Although the semiconductor shortage has continued to dampen auto sales, many investors still find an investment in Ford stock to be intriguing. That’s because Ford remains committed to electrifying its vehicles. Of course, Tesla (NASDAQ: TSLA) continues to be the leader in the EV sector. And with TSLA stock continuing to break new highs, so too does the rest of the EV stock sector.
When the legendary automaker reports this afternoon, investors will closely watch Ford’s total North American car sales. After all, North America is Ford’s largest and most profitable market. This metric is an important indicator of how Ford has kept up with increasing car demand. This comes as the region has continued to emerge from the worst of the COVID-19 pandemic. With supply chain issues continuing to be a major headwind, it’s also important to check how successful the company has been at meeting demand for its EVs.
Admittedly, many investors are now turning bullish on electric vehicle stocks after Tesla stock rose toward a record. But analyst estimates for Ford’s North American vehicles sold in the third quarter are not promising. They estimate that Ford will report a 12.7% year-over-year decline this quarter. Nevertheless, the estimated decline in the third quarter would be the smallest sales decline since early last year. Still, we can’t rule out that the supply chain woes may continue to weigh on Ford’s performance.
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Notable Names Reporting Earnings Today
To highlight, there are plenty of big names posting their latest quarterly results today. This is apparent with the current lineup both in the pre and post-market hours. For starters, the likes of General Motors (NYSE: GM), Boeing (NYSE: BA), Coca-Cola (NYSE: KO), McDonald’s (NYSE: MCD), and Spotify (NYSE: SPOT) are reporting before the opening bell.
On the flip side, if you are looking to track earnings after the stock market closes today, there are several on tap as well. These include the likes of Teladoc (NYSE: TDOC), Twilio (NYSE: TWLO), eBay (NASDAQ: EBAY), and Lending Club (NYSE: LC) among others. All in all, we could be looking at another exciting day in the stock market ahead.
