Company results are crucial for Wall Street

The season of publication of quarterly earnings by Wall Street companies is taking off, slowly becoming a major event for the US stock market and relegating all others to the background.

The end of Trump, the beginning of Biden

The event of Wednesday will be the swearing-in of Joe Biden as president of the United States. This, however, for some time should end the stage of influence of politics (change of power, support package announced by Biden) on the behavior of Wall Street. Thus, the season of publication of results by American companies, which started last Friday, will be in the foreground. It will overshadow other topics, as will be posted later in the week macro data from the USA (including index Fed Philadelphia, PMI indices, home sales in the secondary market), or the development of the coronavirus pandemic.

About the Author

Marcin Kiepas - financial market analyst in Tickmill Groupwith over 20 years of experience. He publishes in Polish financial media. He specializes in the currency market, the Polish stock market and macroeconomic data. In his analyzes, he combines technical and fundamental analysis. It looks for medium-term trends by examining the impact of macroeconomic data, central banks and geopolitical events on financial markets.

Yesterday, the Wall Street indices rose despite the fact that companies bragging about their reports fell. And so Bank of America shares went down 0,73 percent. in reaction to slightly worse than expected results for the fourth quarter of 2020. Goldman Sachs fell 2,26 percent. In this case, the better-than-expected results were used to take profits, after its shares gained 16,75 percent from the beginning of the year only. and they were record expensive last Thursday. Halliburton, after the publication of the results, fell by 0,96 percent. 

Netflix and the "company"

After the close of Tuesday's session, Netflix published the results for the last quarter of 2020. Gains per stock reached USD 1,19 against USD 1,36 and USD 1,3 a year ago. Revenue rose to $ 6,64 billion from $ 5,47 billion, with forecasts at $ 6,6 billion. However, investors were most impressed by the increase in subscribers in the last quarter by 8,5 million against 2,2 million in the third quarter. The total number of subscribers reached over 200 million.

Check it out: How to buy Netflix shares [Guide]

In post-session trading, Netflix shares went up by as much as 12,24 percent. to $ 563,20, after they fell by 7,2 percent since the beginning of the year, making a turn below the resistance zone of $ 550-575,37 at the turn of the year. form as many as 3 peaks drawn in the period July-October 2020. If the company manages to break the resistance at $ 575,37 after the results, the breakout from this six-month consolidation may result in an increase in share prices above $ 700.

Today, before the US session, the reports for the fourth quarter of last year. BoNY Mellon and Morgan Stanley will publish, and after the Alcoa session. On Thursday, the results will be reported, among others Citrix Systems, IBM, Intel, and Travelers.

The real flood of reports will take place only after the weekend, when reports will be published by such leaders as Microsoft, Apple Lossless Audio CODEC (ALAC),, Facebook i Tesla. Then it will definitely be the number one event not only for the US stock market, deciding the fate of local indices, but also for the entire global stock market. Analysts predict that in the last quarter of 2020, the profits of companies included in the index S & P500 will fall by 9,5 percent. compared to last year. However, it should be known that already in the first quarter of this year. an increase of 16,4 percent is expected. Hence, investors may be a bit more indulgent at companies that disappointed with the results for the last quarter of 2020, expecting their improvement a quarter later. Thus, in many cases, not so much the results as the companies' forecasts for the near future will be analyzed.