US stocks rebound, led by big tech earnings boost

The major US stock indices regained some of Wednesday’s lost ground yesterday, fueled by the biggest tech names – many of which gained ground on their share prices ahead of delivering impressive quarterly results after market close. On Thursday, Facebook posted record revenue, Amazon almost tripled its profit year-over-year to $6.3bn, and Google parent Alphabet said that Q3 digital advertising revenue gained 10% versus the same period in 2019. The positive figures came a day after the CEOs of Facebook, Twitter and Alphabet were questioned for hours by a Republican-controlled Senate committee about their influence in public discourse surrounding the election. In after-hours trading, Alphabet stock jumped more than 6%, following a 3.1% gain during market hours. Both Amazon and Facebook fell back slightly in after-hours trading following gains for 1.5% and 4.9% in regular market hours.

Of all the giants to report earnings on Thursday, Apple fared worst. After gaining 3.7% during the day,  its share price fell by more than 5% in after-hours trading following its quarterly update, in which it revealed iPhone revenue dropped sharply in the run-up to the launch of its new models.

Twitter slumps double digits after-hours following earnings update

Both the S&P 500 and Nasdaq Composite gained more than 1% on Thursday, while the Dow Jones Industrial Average finished 0.5% higher. Those gains were not enough to make up for Wednesday’s losses. In the S&P 500 the energy, materials and communications sectors all gained more than 2% on aggregate, while health care was the sole loser among the index’s 11 categories with a 0.7% loss. At the top of the S&P was real estate company CBRE Group, which closed 16.8% higher after beating Q3 profit expectations by a wide margin and confirming it plans to move its headquarters from Los Angeles to Dallas. Twitter was the second biggest winner on Thursday during market hours, adding 8%, while at the back Abiomed and eBay lost 10% and 7.5% respectively. However, following a post-market close earnings report that showed concerning user growth figures, Twitter’s share price slumped close to 20% in late trading.

S&P 500: +1.2% Thursday, +2.5% YT

Dow Jones Industrial Average: +0.5% Thursday, -6.6% YTD

Nasdaq Composite: +1.6% Thursday, 24.7% YTD

Shell offers surprise dividend hike to investors

London-listed shares didn’t muster a bounce back from Wednesday’s losses like their US counterparts, with the FTSE 100 instead holding flat. At the top of the index were Flutter Entertainment and Royal Dutch Shell, which closed the day 8% and 3.7% higher respectively. Oil giant Shell’s gain was driven by an unexpected dividend increase, after the company cut back its dividend payments dramatically in April as oil prices plummeted. The company also gave more details on its plan to restructure in order to reduce its greenhouse gas emissions to net-zero. On Thursday, management said Shell will cut back the number of oil refinery sites it operates and that 2019 was likely the peak of the company’s oil production. The firm’s share price remains down more than 50% year-to-date.

FTSE 100: 0% Thursday, -26% YTD

FTSE 250: -0.4% Thursday, -21.5% YTD

What to watch

AbbVie: For pharmaceutical company AbbVie, sales of its flagship Humira drug – which treats Crohn’s disease and arthritis among other inflammatory conditions – will be the key point to watch in its Friday quarterly earnings report. Zacks Equity Research noted that sales may have been affected by the launch of rival products in international markets as well as Covid-19 restrictions, given that the drug requires a doctor to administer it. Investors will also be looking at sales of other key medicines as sources of growth for the firm. Year-to-date, the company’s share price is down 8.9%. Currently, 16 Wall Street analysts rate the stock as a buy or overweight, and five as a hold.

US oil giants: Following Royal Dutch Shell’s surprise dividend hike, US oil titans Chevron and ExxonMobil will host their own quarterly earnings calls on Friday. Of the two, Exxon has faced the tougher year share price-wise, at a 53% decline to Chevron’s 42.9% loss. This week, Exxon revealed that it will hold its dividend steady for the fourth quarter, the first time it has failed to increase it in decades. Of the two, Chevron is far more highly regarded by Wall Street at present. Its stock has 18 buy or overweight ratings, seven holds and a sell. By comparison, the vast majority of analysts rate Exxon stock as a hold.

Charter Communications: Better known to consumers as Spectrum, Charter Communications is a telecoms firm that offers internet, cable TV and mobile phone services. The company’s share price has lagged the broader index with a 10.6% loss year-to-date, but over the past 12 months it remains up by nearly 15%. Investors will be watching to any boost that the pandemic has provided for internet subscriptions and media consumption, with consumers both working and relaxing at home. Analyst expectations are for a Q3 earnings per share figure of $3.08 when the company reports on Friday, up from the $2.93 they predicted for the quarter three months ago.

Crypto corner: Bitcoin fees at 28-month high as transaction traffic rockets 1,800%

The cost of doing business with bitcoin is at a 28-month high as record demand causes the worst network congestion in years, according to Glassnode.

As of Wednesday, Glassnode says the average transaction fee for bitcoin was 0.00086764 BTC, the highest since 2018. In fiat terms this means the cost of transaction bitcoin is around $11.66 at the time of measurement.

The rise in fees is caused by a backlog of transactions awaiting processing by miners. As the traffic grows miners increase prices to ease congestion, but this in turn causes users to increase their fees to speed up their own transaction times. Glassnode says there has been an increase in activity on the blockchain of 1,800% in the past 12 days.

All data, figures & charts are valid as of 30/10/2020. All trading carries risk. Only risk capital you can afford to lose