US corps to re­port best and worst of times

The Pak Banker - - COMPANIES/BOSS -

Stock mar­ket in­vestors who spent Jan­uary swayed by oil prices, eco­nomic weak­ness in China and cen­tral bank spec­u­la­tion may con­tinue to do that next week, even though it should be a dra­matic one for earn­ings re­ports and eco­nomic data.

Fourth- quar­ter 2015 earn­ings re­ports com­ing from In­ter­net leader Al­pha­bet and Exxon Mo­bil, an old­e­con­omy com­pany hit by fall­ing oil prices, will spot­light the yin and yang of Cor­po­rate Amer­ica. If shares of Al­pha­bet, Google's par­ent, rally in re­sponse to the strong re­sults that are ex­pected, it could dis­place Ap­ple (AAPL.O) as the big­gest com­pany in the world. That would be ironic and a con­fir­ma­tion of the move away from tra­di­tional com­pa­nies to new tech ones: Ap­ple un­seated Exxon when it climbed to the top of the list in 2011.

So far, the earn­ings re­port­ing sea­son has painted a bi­fur­cated pic­ture of cor­po­rate health: so­cial me­dia be­he­moth Face­book (FB.O) re­ported fourth-quar­ter rev­enues more than 50 per­cent higher than those of the same quar­ter a year ear­lier, while oil ma­jor Chevron (CVX.N) re­ported its first quar­terly loss in more than 13 years.

As they have for sev­eral years run­ning, com­pa­nies are gen­er­ally beat­ing ex­pec­ta­tions on earn­ings but do­ing so via cost cuts and buy­backs; the num­ber of com­pa­nies sur­pris­ing an­a­lysts with bet­ter-than-ex­pected sales fig­ures is far smaller.

Per­haps be­cause of that, in­vestors have muted their re­sponse to earn­ings re­ports a bit while they ramp up trades based on more global events, such as Chi­nese eco­nomic re­ports or oil price de­clines and in­creases. Though in­vestors con­tinue to bid up stocks of com­pa­nies that beat ex­pec­ta­tions and sell those that fail, the spread be­tween their per­for­mance has nar­rowed, said Jonathan Golub, chief equity strate­gist at RBC Cap­i­tal Mar­kets in New York.

Al­pha­bet re­ports earn­ings Mon­day. Its stock has moved on av­er­age 5.5 per­cent (some­times up, some­times down) fol­low­ing its pre­vi­ous eight quar­terly re­sults. With a mar­ket cap­i­tal­iza­tion near $517 bil­lion, such a move higher would cat­a­pult it over Ap­ple's $536 bil­lion. The com­pany's num­bers are ex­pected to shine.

"For the past two quar­ters Al­pha­bet has de­liv­ered strong re­sults beat­ing an­a­lysts' es­ti­mates," said Peter Garnry, head of equity strat­egy at Saxo Bank in Copen­hagen. "Face­book's blowout fourth-quar­ter re­sults point to strong mo­bile and video num­bers for Google."

Other com­pa­nies re­port­ing earn­ings next week in­clude Aetna, Pfizer PFE., Merck, Anadarko, Cono­coPhillips, Oc­ci­den­tal Pe­tro­leum and Gen­eral Mo­tors. On the eco­nomic front, the all-im­por­tant U.S. em­ploy­ment re­port ex­pected Fri­day will close a week that in­cludes key data on fac­tory ac­tiv­ity and con­struc­tion spend­ing, car sales, ser­vices sec­tor growth and in­fla­tion.

The num­bers come af­ter data showed U.S. eco­nomic growth slowed sharply in the fourth quar­ter with gross do­mes­tic prod­uct up at a 0.7 per­cent an­nual rate.

"Man­u­fac­tur­ing is clearly weak, seg­ments of man­u­fac­tur­ing are in a re­ces­sion, so the one thing that con­tin­ues to keep our head above wa­ter on a GDP ba­sis is the con­sumer," said Don El­len­berger, head of mul­ti­sec­tor strate­gies at Fed­er­ated In­vestors in Pitts­burgh. "Any sense of weak­ness in the pay­roll num­ber or any of the em­ploy­ment sta­tis­tics we get next week would re­ally be a cause for con­cern."

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.