Will Earnings Season Start to Produce Some Big Winners?

The market danced around on tariff talk and President Trump's threats to fire Fed Chair Jerome Powell to end the week, but it was all talk and no action, and the market ended up with a mixed day. The S&P 500 and Nasdaq 100 QQQ closed flat, while the Russell 2000 IWM outperformed for the third time during the week. The DJIA was slammed, losing 1.5%, mainly due to UnitedHealth UNH, which has the second-largest weighting in the index and lost 22% on poor earnings.

While the week was marked by more tariff turmoil and uncertainty, some not-so-dovish comments from Powell did not help matters. Powell's comments about being in no rush to cut rates infuriated Trump and raised speculation about whether Trump may try to fire him before his term ends next year.

There was little progress on the tariff front as the battle with China intensified, and negotiations with countries such as Japan and the U.K. are likely to take longer than many folks had hoped. News of a deal could come at any time, and that helps provide some technical support.

The most interesting price action was the relative strength in smaller stocks. The Russell 2000 outperformed, and the biotechnology sector IBB performed particularly well. As I discussed earlier this week, I believe we may be close to a major cycle low in biotechnology for a variety of reasons.

Next week, earnings season will pick up, and we will start to hear from some major technology names such as Alphabet GOOGL. Netflix NFLX just reported and initially the stock is up slightly on a beat and increased EPS guidance, but soft revenue guidance.

So far, earnings season has not produced any big winners, but it's mostly been financials. As more smaller stocks report, we should see some positive surprises.

Have a great Easter holiday, and I will see you on Monday.

At the time of publication, Rev Shark had no positions in any securities mentioned.