US OPEN: Wall Street fall as oil plunges.

• Collapsing oil prices drag US stocks down
• IBM (IBM.US)  to report earnings after market close
• Disney (DIS.US) downgraded to neutral

All major US indexes are trading in red today, mainly dragged down by energy shares after the May future contract for WTI crude expiring tomorrow dropped more than 40% to below  to just over $10 a barrel, its lowest in over 21 years, as traders and producers ran out of places to store unsold oil.

 

Investors continue to monitor coronavirus developments with the number of infections in the US approaching 765K and the death toll surpassing 40.5K. New York City is canceling concerts, festivals and all other nonessential events through June as the city seeks to drive down its coronavirus infection rate, Mayor Bill de Blasio announced Monday.

 

Several companies posted their quarterly reports. The results were mixed as in the previous days. Figures from Charles Schwab and Lennox International disappointed but those from Community Bank System and Halliburton came above expectations. IBM, Steel Dynamics and First Financial Bancorp are still expected to release quarterly results today.

S&P500 (US500) is trading near key resistance at 2904.6 pts. If sellers manage to take control on the market, then downward move into 2648 is possible. However, in case of a break higher, the next resistance to watch is 3036 pts which is additionally strengthen by 200 MA (marked in red color). Source: xStation5

IBM (IBM.US) is scheduled to report its Q1 results today after the closing bell. The iconic tech company is planning to follow Microsoft (MSFT.US) as it transitions deeper into cloud computing.  Arvind Krishna, company's CEO, is attempting to change tradition-bound IBM to a cloud-computing-oriented business model. Last quarter (Q4 2019), IBM reported better than expected revenue growth, following five quarters of declining sales. Red Hat revenue soared 24% and total cloud revenue was 21% higher. Despite this solid expansion from vital growth unit, company's overall quarterly sales climbed just 0.1% in the quarter. It is worth mentioning that the company managed to beat EPS estimates in each of the previous 8 quarters. However,  growth in recent years was very concerning and acquisite RedHat was meant to change that by boosting growth and opening the company to new areas, like cloud computing.
Analysts expect  Q1 sales to slip 1.2% YoY to $17.97 billion. Meanwhile, adjusted quarterly earnings are projected to fall by 20.0% YoY to hit $1.80 a share.

 

Analysts estimate that in the first quarter IBM's adjusted earnings per share will drop sharply while corporate revenue and revenue at Global Technology Services decline slightly. Source: Bloomberg,  Xtb research.

 

IBM dividend yield is impressive - 5.46%. It will be interesting to see whether the company will manage to maintain it or will decide to make some changes to the payout. Investors should also pay attention to the cloud revenue, as this segment is getting to be more significant each quarter and this trend is expected to continue. The segment may also benefit from stay at home restrictions. However, investors can see that shares of IBM have fallen nearly 30% in the past five years. And despite IBM’s recent climb, its stock price has slipped 10.8% since the start of the year.

IBM (IBM.US) share price managed to stay above major $114.39 per share level. Today’s quarterly report will have the biggest impact on prices.  If results turn out to be better than expected, then the price may be heading towards $ 128.82 per share. However if the data turn out to be disappointing, then stock price  may test support at the $ 104.03 level. xStation5 source

 

M&T Bank (MTB.US) - reported worse than expected figuers. In th efirst quater the company earned $ 1.95 per share, well below analysts estimates of $ 2.47 a share. Bank increased its provision for credit losses to $ 250 million from $ 22 million a year ago, and $ 54 million at the end of the prior quarter. M&T Bank announced the impact of coornavirus on its business could be material.

 

Walt Disney (DIS.US) - according to the Financial Times report, company is suspending pay for over 100,000 employees, thanks to which the Disney will save up to $ 500 million a month. UBS lowered Disney rating to "neutral" from "buy," saying that coronavirus hits every Disney business, especially theme parks.

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