The Daily Breakdown takes a look at stocks as investors fight off geopolitical headlines ahead of earnings season.
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What’s Happening?
The Strait of Hormuz is back in focus after failed weekend negotiations has US stock indices down about 0.6%, oil and the USO ETF up roughly 7%, and Bitcoin declining from the key $74K level. At the same time, earnings season is set to begin.
Goldman Sachs kicked off the season by reporting this morning (more on that below), while JPMorgan, Citigroup, Wells Fargo, Bank of America, Johnson & Johnson, ASML, Netflix, Taiwan Semiconductor, and PepsiCo all stand out this week.
Stock prices have moved lower even as earnings estimates have continued higher, and while price tends to lead fundamentals, it’s also prone to overreaction. Earnings season should help determine which signal is right and, with any luck, give investors a chance to shift the conversation away from geopolitics and back toward fundamentals.
The burning question is, which market shows up once earnings season begins: the one fueling this rebound or the one that just delivered stocks’ worst quarterly performance in more than three years?
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Chart of the Day — AVGO
Broadcom has been on a roll, with shares rising in seven of the last eight sessions and gaining more than 26% in that stretch. For now, the rally was enough to send AVGO above the $350 to $360 area, which had been resistance for all of 2026. For bulls to maintain momentum, they’ll want to see this prior resistance zone become support.
Options
Because AVGO’s stock price is so high, the options prices are high, too. This can make it difficult for investors to approach these companies with options. In that case, many traders may opt to just trade a few shares of the common stock — and that’s fine. However, one alternative is spreads.
Call spreads and put spreads allow traders to take options trades with a much lower premium than buying the calls outright. In these cases, the maximum risk is the premium paid. For those looking to learn more about options, consider visiting the eToro Academy.
What Wall Street’s Watching
GS
Despite topping earnings and revenue estimates, Goldman Sachs stock is slipping this morning. Goldman’s equity traders delivered a second straight quarterly record, with stock-trading revenue rising to $5.3 billion as volatility boosted activity, topping the prior record of $4.3 billion. Fixed-income, currency and commodities trading generated $4 billion, missing analyst estimates, while advisory fees jumped 89% from a year earlier as dealmaking rebounded. Dig into the fundamentals for GS.
IGV
While stocks wavered a bit on Friday, software stocks were hit hard, with the IGV ETF falling 2.6%. That capped a three-day slide of more than 10% from Wednesday’s peak, while software and cybersecurity names such as Palo Alto Networks, Salesforce, and ServiceNow faced even steeper pressure.
AMZN
Amazon was the top-performing Magnificent 7 stock last week, rallying 13.6% for its best week since January 2023. Shares are now up nearly 20% over the last two weeks as bulls try to rebuild momentum after a choppy stretch. Check out the chart for AMZN.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.