The decade-long bull market may be showing signs of slowing down, but — from week to week —those signs often disappear. And this week was one where arguments can be made that not only has this market been fully resuscitated, there’s still tons of life left in this bull run.
Not only did the Dow on Friday reclaim the 25,000 level (for the first time in nearly a month), it was the blue chip index’s sixth positive session in the past seven. Essentially, fears surrounding trade wars with China has given way to what Wall Street expects to be another quarter of positive earnings results. For the week, the Dow added 2.3%, while the S&P 500 index closed higher by1.5%. Notably, the technology-heavy Nasdaq Composite index finished 1.8% higher, while reaching yet another new all-time high.
As have been the case for most of the year, investors continue to the encouraged by the fact that the economy continues to strengthen. “We’re pretty positive on the overall market; the 20% profit growth we’re expecting this quarter should be a fundamental anchor for stocks,” said Anthony Saglimbene, global market strategist at Ameriprise Financial.
With that in mind, here are the stock’s to keep an eye on this for this week.
Netflix (NFLX) – Reports after the close, Monday, July 16
Wall Street expects Netflix to earn 79 cents per share on revenue of $3.94 billion. This compares to the year-ago quarter when earnings were 15 cents per share on $2.79 billion in revenue.
What to Watch: Neflix’s Q2 results will be the first among its FAANG peers — Facebook (FB), Amazon (AMZN), Apple (AAPL) and Google (GOOG , GOOGL) — to be released. Expectations are high in terms of subscriber additions. The internet movie streaming giant is expected to deliver second-quarter total subscriber net additions of 6.2 million. 1.2 million of these are expected to come from the U.S., while 5.1 million internationally. And options traders are betting for a double-digit move in Netflix stock (up or down) based on its subs numbers.
IBM (IBM) – Reports after the close, Wednesday, July 18
Wall Street expects IBM to earn $3.04 per share on revenue of $19.9 billion. This compares to the year-ago quarter when earnings were $2.94 per share on $19.29 billion in revenue.
What to Watch: The blue chip company is attempting to transform itself for the new age, but it continues to attract doubters. IBM’s success, particularly in the areas of technology services, cloud-platform and cognitive-solutions (includes IBM’s Watson AI) will determine its future. The main question heading into the quarter is, to what extent have these newer businesses grown to offset the decline in its legacy operations? Analysts expect technology services and cloud-platform revenue to rise 2.6%, to $8.63 billion and cognitive-solutions revenue to rise 4.4% to $4.76 billion from the year-ago quarter.
Microsoft (MSFT) – Reports after the close, Thursday, July 19
Wall Street expects Microsoft to earn $1.08 per share on revenue of $29.21 billion. This compares to the year-ago quarter when earning were $1.06 per share on $24.7 billion in revenue.
What to Watch: The strength of Microsoft’s Commercial Cloud business has been, and will continue to be, the catalyst for the stock’s strong return in 2018 (up 23%, while trading at 52-week highs). Last quarter, revenue in its commercial cloud revenue, which consists of Office 365 commercial, Azure, and Dynamics 365, soared 58% year over year to $6 billion, accounting for 22% of Microsoft’s total revenue. What’s more, not only did total revenue and earnings per share climb 16% and 36%, respectively, Microsoft returned $6.3 billion to shareholders through dividends and share buybacks. Can the good news continue to flow in Q4?
General Electric (GE) – Reports before the open, Friday, July 20
Wall Street expects GE to earn earn 18 cent per share on revenue of $29.39 billion. This compares to the year-ago quarter when earning were 28 cents per share on $29.56 billion in revenue.
What to Watch: Will this be the earnings report that finally settle investors’ nerves about the direction of the company? The company, which has been the victim of tons of bad luck, poor timing and mismanagement, has issued its strategic review, which includes plans to break up its conglomerate into easier-to-understand pieces. Is the worst now over for GE stock, which has gotten obliterated over the past year? When the company reports earnings this coming Friday, investors will want assurances that GE has bottomed and is ready to move upward.
