Wall Street poised to end a hectic week, marked by new quarterly budget announcements from the world of corporate America and Monday’s sharp slump, which saw the Dow Jones capitulate by 700 points, at the strongest pace since October 2020. At Around 16 Italian time the Dow Jones rises by 0.30% to 34.928 points; the S&P advanced 0.34% to 4,383, the Nasdaq is + 0.26% to 14,722 points.
After a Black Monday-style session, the US stock market marked a recovery for all subsequent sessions.
The rises allowed the Dow Jones to report a week-long gain of around 1%; the S&P 500 is up 0.9% on a weekly basis and the Nasdaq Composite is up 1.8%. The Dow Jones is half a percentage point away from testing a new record, while the Nasdaq and S&P are far from their all-time highs of just around 1%.
The attention of the operators remains on the quarterly season, but also on the spread of the Delta variant, which has made the Covid-19 pandemic the protagonist again and therefore the fear of possible impositions of new restriction-lockdown measures in the world.
In terms of balance sheets, compared to a quarter of the companies trading on the S&P 500 that have already released their quarterly reports, Refinitiv estimates second quarter earnings growth of 76%, at the strongest pace since 2009.
S&P Global also reports that companies have so far reported average profit margins of 12.8%, above the historical average.
In today’s session we highlight the rises in FAANG shares such as Facebook + 2.6%, which benefits from the financial results of rivals active in the social media sector; also go up Apple, Microsoft, Amazon and Alphabet which, together with the giant of Mark Zuckerberg, will publish their quarterly reports next week.
Good indications from the hi-tech world arrived yesterday, after the end of the trading day, with the financial statements of Snap and Twitter.
The Snap stock soared up 23% (now + 21%), after the company released a report that highlighted better-than-expected earnings, revenue and user growth in the second quarter. In particular, the adjusted earnings per share amounted to 10 cents, compared to the 1 cent loss per share forecast by the analysts interviewed by Refinitiv. Revenue was $ 982 million, better than the expected $ 846 million, while global daily active users stood at 293 million, better than the 290.3 million estimated by the State Street consensus. Snap ended the second quarter with 293 million daily active users, up nearly 5% from the 280 million reported in April and more than 23% from 238 million users in the second quarter last year.
Twitter also did very well: the adjusted net profit of the company managed by Jack Dorsey stood at 20 cents per share, compared to the 7 cents expected by the analysts interviewed by Refinitiv. Revenue was $ 1.19 billion, better than the consensus projected $ 1.07 billion and up 74% year-on-year. The pace of revenue growth was the fastest since 2014. Twitter’s ad revenue jumped 87% year-on-year to $ 1.05 billion, compared to 206 million daily monetizable active users, up from 206 , 2 million expected by analysts interviewed by StreetAccount. After its loss in the second quarter of 2020 of 1.38 billion, Twitter ended the second quarter of 2021 with a net profit of $ 65.6 million. In afterhours trading, Twitter prices have flown up to + 9%, now they are recording a minor rise (+ 1.7%).
More than the balance sheet, Intel’s guidance on gross margin disappointed. The American chip giant announced that it ended the second quarter of the year with a net profit of $ 51 billion, down 1% compared to the profit collected in the same period of 2020. The net profit per share was attested at $ 1.24, up 4% yoy. On an adjusted basis, eps was $ 1.28, up 12% yoy and above the expected $ 1.06 per share. Adjusted revenue amounted to $ 18.5 billion, up 2% year-on-year, better than the estimated $ 17.8 billion. On the back of its balance sheet results, Intel revised its 2021 adjusted revenue guidance upward by $ 1 billion to $ 73.5 billion, versus an eps of $ 4.80. Intel’s findings suggest that the boom in computer sales that began with the Covid-19 pandemic could continue as people return to school and offices. However, the stock loses after the chip giant said it expects non-GAAP gross margin of 55% for Q3, down sharply from 59.2% in Q2.
Intel explained the decline in margins with the restrictions that are hitting the offer and with the costs associated with the production of chips with the adoption of a new technology. The stock marks a fall of almost -5%.
Among the other stocks in the spotlight, Didi is not doing well at all, with ADRs losing more than 17% after yesterday’s thud on Wall Street, equal to -11%.
According to Bloomberg reports, the Chinese authorities are planning an even higher penalty than the record one paid to Alibaba of $ 2.8 billion. But the penalty against Didi could be even more severe: Beijing is in fact thinking of forcing the company to delist.
On July 16, officials from seven Chinese government agencies raided the offices of the ride-sharing giant. Officials conducted an inspection to identify any cyber security risks. One of the agencies, the Cyberspace Administration of China (CAC), had already accused the company of illegally collecting its users’ data. Chinese company Didi Chuxing, also known as Chinese Uber, landed on the New York Stock Exchange on June 30, launching one of the largest US IPO deals in the past decade.
Attention also to American Express: the turnover of the American giant in the quarter ended June by 33% to $ 10.2 billion compared to $ 7.7 billion in the second quarter of 2020, and above $ 9.6 billion expected by the consensus. The wake of five consecutive quarters in which American Express revenue had fallen. “We have seen spending acceleration by credit card holders compared to the previous quarter, reaching higher levels, in June, compared to those before the pandemic: the largest chunk of this growth in expenses has come by Millennials, Generation Z and small businesses, ”commented Stephen Squeri, president and CEO of the group. The stock is up by more than 3%.
Focus on US Treasury rates, with 10-year rates breaking the 1.30% threshold to the upside, after plunging to a five-month low of 1.13% earlier in the week, in what could be renamed the Black Monday, due to the escape from the stock market. Escape from equities parallel to the hoarding of Treasuries, fueled by fear of the resurgence of Covid-19.