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US stock market set to open higher, US2000 finds support at 1650 pts
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General Electric (GE.US) surges in pre-market trading on earnings beat
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Boeing (BA.US) expects total cost of 737 grounding to surpass $18 billion
Indices from Wall Street are expected to launch today’s session higher and add to previous gains. Earnings season continues in a full swing with McDonald’s, Boeing and General Electric reporting results ahead of the opening bell. What seems to be the most interesting is the fact that, in spite of reporting disastrous earnings, Boeing is moving higher in pre-session trading.
US small-cap index Russell 2000(US2000) pulled back from a key resistance (1700 pts) amid concerns over coronavirus spreading. However, the index seems to have found bottom at the support zone ranging near 1650 pts and is gearing for another upward impulse. The first target to watch is, of course, the aforementioned resistance at 1700 pts. However, it should be noted that companies from Russell 2000 tend to report sales that are weaker than forecasts this season therefore there is a reason for this index to be lagging its peers. Source: xStation5
Apple (AAPL.US) reported earnings report for Q4 2019 yesterday after session close. The US company reported EPS of $4.99 against an expected $4.56. Revenue topped $90 billion for the first time and reached $91.82 billion. However, the company decided to publish a wider forecast than it usually does. Increased width was explained by an uncertainty tied to the impact of coronavirus on retail sales. Apple said that it tries to make up for shortages stemming from the fact that some of its suppliers are located in Wuhan. The company expects revenue to fall in the $63-67 range in the first quarter of 2020.
General Electric (GE.US) also reported strong Q4 earnings. The US conglomerate reported EPS of $0.21 against an expected EPS of $0.18. Revenue came in at $26.24 billion while markets expected $25.57 billion. As the company met its full-year targets, it has decided to boost forecasts for 2020. Industrial free cash flow - metric closely watched by GE analysts - is expected to fall in the $2-4 billion range in 2020 while analysts expected a forecast of $1.2 billion. GE enjoys strong gains in pre-session trading and is said to rise as much as 7%.
General Electric (GE.US) failed to break above the resistance ranging above $12 handle. However, the stock is set to open at the highest level since October 2018 after Q4 earnings turned out to be better than expected. The zone ranging near 23.6% Fibo level of the major downward move started in mid-2016 could be in play today ($12.90). Source: xStation5
Earnings from McDonald’s (MCD.US) came more or less in line. EPS of $1.97 was slightly higher than expected $1.96 and same store sales grew at the pace of 5.9% YoY (expected 5.2%). Revenue of $5.3 billion matched forecasts. Solid results came after the company decided to hike prices in North America, especially the US. However, McDonald’s has closed restaurants in Wuhan and surrounding Chinese cities therefore earnings in the first quarter of 2020 may be weaker.
On the other hand, Boeing (BA.US) reported disastrous results for the final quarter of 2019. The US plane maker saw its revenue slump 37% YoY to $17.91 billion. Core loss per share amounted to $2.33 against earnings per share of $5.48 a year ago. The company plans to cut production rate of grounded 737 jets to 12 per month and later to 10 per month in 2021. Operating cash flow sank from $15.3 billion in 2018 to $2.4 billion cash burn in 2019. However, it was a smaller cash burn than expected. Planemaker expects that the total cost of 737 ground may surpass $18 billion.
In spite of reporting disastrous earnings, Boeing (BA.US) is moving higher in pre-market trading. The stock is poised to open above $320 mark and may be set to test the nearest resistance zone at 78.6% Fibo level ($325) during today’s session in case goods moods prevail. Source: xStation5
