Stellar Meta, Microsoft Earnings Can’t Save a Frothy and Extended Market
Strong opens and weak closes are a sign of a poor market. Meanwhile, earnings from Amazon and Apple are ahead of expectations, but not strong enough to trigger chasing.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
Microsoft MSFT and Meta META posted excellent earnings on Wednesday night, helping the indexes recover losses caused by a hawkish Fed. However, the good news was sold, leading to some very ugly action on Thursday.
Despite the gap up in the senior indexes, nearly twice as many stocks finished the day with losses as finished with gains. The S&P 500 finished with a loss of 0.4% and small-caps IWM declined 0.8%. The Magnificent Seven ETF MAGS managed a gain of 1.3% but finished well off its opening highs.
Strong opens and weak closes are a sign of a poor market, and there have now been three straight sessions of that after weeks of intraday strength and strong closes. It is very toppy action, and even if it isn’t a major turning point, there is a significant risk of some struggles, especially since there won’t be more positive earnings news from the Magnificent Seven after Thursday night.
Amazon AMZN earnings are hitting and seeing a negative reaction initially. EPS of $1.68 is well ahead of the estimate of $1.33. Revenues is ahead as well, and there is increased guidance, but this is not a blowout report like we saw from Microsoft and Meta. Expectations have increased substantially, and Amazon just doesn’t have the leverage to produce blowout numbers. Amazon stock has a history of recovering from initial weakness on earnings, but it will depend on the conference call.
Apple AAPL earnings are also ahead of expectations with EPS of $1.57 versus an estimate of $1.43. The stock is up slightly on the news, but this isn’t enough of a positive surprise to cause aggressive chasing. While iPhone sales were very good, Apple has been lagging in AI, which will be a primary focus on the conference call.
We’ll see how this earnings news is digested, but the price action on Thursday was a negative, and it is going to take some work to digest recent gains and produce better technical setups. Investors have been awaiting some corrective action for a while, and it looks like it may be here.
Have a good evening. I’ll see you Friday.
At the time of publication, Rev Shark was long META.
