With more than 75% of the S&P 500 having reported earnings, it’s time to check in on the results. Here’s what The Daily Breakdown found.
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What’s Happening?
With more than three-quarters of the S&P 500 having reported earnings, here are a few high-level takeaways:
- 80% of S&P 500 firms have beaten earnings estimates, putting the index on pace for its best beat rate since Q3 2021.
- Tech, real estate, and communication stocks lead the way, with over 90% topping forecasts.
- Two themes are standing out: Resilient US consumer spending and continued investment in AI infrastructure from mega-cap tech firms.
Heard on Wall Street
Richard D. Fairbank, CEO of Capital One: “If you read the news every day, you can think the world’s falling apart, but actually, if we don’t read the news and just look at what our customers are telling us with their behaviors, it is a picture of strength.”
Charlie Scharf, CEO of Wells Fargo: “Consumers and businesses remain strong…but there is uncertainty, and we should recognize there is risk to the downside, as the markets seem to have priced in successful outcomes.”
Christophe Le Caillec, CFO of American Express: “What you see is remarkable resilience across our customer base.”
Ed Bastian, CEO of Delta, regarding travel: “The environment has been stable since resetting to a lower growth rate earlier this year…The fundamentals of the US economy are solid.”
Michael Miebach, CEO of MasterCard: “Consumer spending remains healthy…we remain positive about our growth outlook as the fundamentals that support consumer spending have been strong.”
Ewout Steenbergen, CFO of Booking (paraphrased): “Generally, we see the top-end of the US consumer market as a little stronger, with more spend in the five-star hotel category and on international travel…But at the lower end, we see more careful behavior from US consumers.”
Andy Jassy, CEO of Amazon, regarding tariff impacts: “Through the first half of the year, we haven’t yet seen diminishing demand nor prices meaningfully appreciating.”
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The Setup — QQQ ETF
A lot of heavy-hitting tech companies have been in focus lately, including Nvidia, Apple, and Palantir. And despite some of the turbulence lately, the QQQ ETF remains down just slightly from the record high it set last week.
The chart actually looks quite similar to the S&P 500, with the QQQ having run into resistance in December and February before a key breakout in June. One noteworthy point to make is that tech has been leading the market higher over the last few months, so some investors may be taking their next clues from the Nasdaq.
The market has enjoyed a big rally over the last few months. That could usher in some consolidation and/or a pullback in the broader market. If we see that with the QQQ, bulls will want to see the ETF hold up above the $535 to $540 area. This zone was resistance in December and February, and investors will hope it’s support if it’s tested again.
Options
For options traders, calls or bull call spreads could be one way to speculate on support holding on a pullback. In this scenario, buyers of calls or call spreads limit their risk to the price paid for the calls or call spreads, while trying to capitalize on a bounce in the ETF.
Conversely, investors who expect support to fail could speculate with puts or put spreads.
For those looking to learn more about options, consider visiting the eToro Academy.
What Wall Street’s Watching
Shares of Eli Lilly tumbled lower on Thursday despite beating earnings and revenue expectations and giving a boost to its full-year outlook. Instead, investors are focusing on data from its late-stage oral weight loss drug trial, which showed disappointing efficacy compared to competitors. Analyst price targets now imply more than 50% upside for LLY stock.
In a little over a month, Ethereum prices soared more than 85%, and now after a quick pullback, it’s back on the rise. ETH has climbed in four of the last five days, rising about 14% in the process. It continues to hover just below the key $4,000 level and has been a key leader in the alt-coin rally. Check out the chart for ETH.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.