Summary:
- US futures point to a positive opening
- Solid earnings from BlackRock (BLK.US) and Bank of America (BAC.US)
- Netflix (NFLX.US) earnings are on the agenda shortly after the market close
Following a successful session in Europe, NY traders are likely to experience a green open of the stock market. Technically the SP500 futures (US500) are getting closer to an all-time high and if upbeat moods continue prevailing, the index may do so even before Easter. As both, the US House of Representatives and the US Senate, are off this week corporate earnings are likely to steer price moves of indices.
The US500 (S&P 500 futures underlying) is trading at fresh 6-month high and just slightly below the all-time high at 2946.7 pts handle. In fact, one cannot rule out that a test of the ATH will occur this week as the index is around 0.9% lower. However, in case bulls do not find more fuel a pullback could take the index to as low as 2865 pts handle. Source: xStation5
Reports published today surprise with better-than-expected earnings
UnitedHealth Group (UNH.US) managed to outperform market estimates in terms of both earnings and revenue. Revenue in the January-March period reached $60.308 billion, 0.91% higher than forecasted. Earnings surprised even more as the EPS of $3.73 turned out to be 3.64% better-than-expected. However, this does little to ease concerns surrounding the company as political uncertainty still weighs over the US managed healthcare sector.
Johnson & Johnson (JNJ.US) warned at the beginning of 2019 that the year is likely to be weak for the company due to mounting lawsuits as well as political pressures on drug prices. Nevertheless, the company managed to surprise markets positively when it reported first quarter earnings today. Just like UnitedHealth Group, Johnson & Johnson beat market estimates of both earnings and revenue. Despite predictions of flat operational growth, company’s organic sales increase 3.9% YoY in the first quarter of 2019.
The previous year was quite volatile on the global stock markets. In turn, asset managers saw some outflows while investment banks saw lacklustre trading revenue and profits. However, BlackRock’s (BLK.US) show that the US manager kicked off 2019 on the right footing. BlackRock saw institutional inflows of $29.1 billion and its AUM reached $6.52 trillion. While revenue of $3.346 billion was more or less in line with estimates. On the other hand, EPS of $6.61 was almost 8% higher than the median estimate.
Bank of America (BAC.US) is another major US bank that has already reported its Q1’s earnings. Situation here is to huge extent similar to the one of BlackRock. Bank of America met revenue estimates and outperformed in terms of earnings. While trading revenue disappointed, the company more than offset it with better than expected net interest income. Net interest income increased 10% YoY thanks to higher interest rates and lower interest expenses.
Bank of America (BAC.US) once again tries to break out of the trading range ($27.70-29.70). However, just like it was before a resistance surfaced near the $30.10 handle. Future price moves of this stock may depend on whether the price pulls back into the consolidation range on manages to stay above the support zone ranging $29.50-29.70. Source: xStation5
Netflix to report earnings after the session close
Looking ahead into the earnings calendar one should keep in mind that Netflix is due to publish its financial results after the closing bell. Let us remind that the company showed that it had as many as 139 billion paying subscribers as of the end of the past year and this line will be pivotal this time around too. Note that investors may become yet more demanding when it comes to incoming earnings having in mind that both Apple and Walt Disney have officially debuted their streaming platforms since then. The consensus expects sales for the first quarter of $4.505 billion and EPS of $0.58. It’s also worth adding that executives project 8.9 million new subscribers for the first quarter of this year - this number could be a marker mover in after-market hours trading.
Netflix (NFLX.US) stock failed to rally along with the broad US market. The company could have lagged due to increased competition from Apple or Walt Disney. Whatever the cause is, it should be noted that the price was quite reactive to Fibo levels of last year’s slump, especially 61.8% at $348 and 78.6% at $379. As the stock finished yesterday’s trading at the lower of the two today’s earnings may help the price leave consolidation range. Source: xStation5
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