There is earnings information overload today, yet the machine that is the stock market still seems to be in working order, even if it is moving a little slower.
In a nutshell, we can boil down the bigwig earnings reports like this:
- Microsoft (MSFT) - good
- Facebook (FB) - good
- Visa (V) - good
- Lam Research (LRCX) - good
- Chipotle Mexican Grill (CMG) - good
- UPS (UPS) - bad
- Tesla (TSLA) - ugly
- 3M (MMM) - ugly
There you have it: the good, the bad, and the ugly. Notice that there is more good than there is bad and ugly, which is true in an overall sense.
That has been a recurring theme since the first quarter earnings-reporting period started and it has occurred alongside other recurring themes, namely disappointing foreign economic data, dovish monetary policy assurances from central bankers, dollar strength, and declarations from Democratic candidates that they are running for president.
In a manner of speaking, the gang's all here today.
The earnings results are mostly better than expected; South Korea reported a 0.3% qtr/qtr contraction in first quarter GDP, marking the worst growth rate since the fourth quarter of 2008; the Bank of Japan left its key policy rate unchanged and said it expects rates to remain extremely low at least until Spring 2020; the U.S. Dollar Index is up 0.1% to 98.30; and former Vice President Joe Biden officially announced he is running for president.
How is the stock market taking all of this? Well, it is taking it in stride given that it is more of the same, including data out of the U.S. that paints a comparative growth picture that is relatively good versus the rest of the world.
To that end, durable goods orders for March increased 2.7% m/m (Briefing.com consensus +0.9%) while orders, excluding transportation, rose 0.4% m/m (Briefing.com consensus +0.3%).
The key takeaway from the report is that orders for nondefense capital goods, excluding aircraft, jumped 1.3%. These orders are a proxy for business spending, so one can say that business spending accelerated in March in an encouraging fashion.
Initial claims for the week ending April 20 increased by 37,000 to 230,000 (Briefing.com consensus 215,000). Continuing claims for the week ending April 13 increased by 1,000 to 1.655 million.
The headline number for initial claims was disappointing, yet the silver lining -- and the key takeaway -- is that the four-week moving average of 206,00 for this series remains close to a 50-year low.
Currently, the S&P futures are up three points, which leaves them 0.1% above fair value. The Nasdaq 100 futures are up 30 points, which leaves them 1.0% above fair value. The Dow Jones Industrial Average futures, though, are down 82 points and are trading 0.5% below fair value
The weakness in the Dow futures comes courtesy of 3M, which is down 18 points, or 8.2%, after its ugly earnings report and outlook, and which made the news from Microsoft and Facebook sound that much better for growth-oriented investors.