Google & Microsoft Deliver Strong Earnings, Meta & Amazon Next

Earnings reports vary, with Texas Instruments posting disappointing results, Visa announcing a buyback, Hilton expressing caution and Snap snapping back

• Strong earnings are fueling market gains; Google and Microsoft shine, while Alphabet and Snap face challenges.
• Corporate outlooks are mixed. Texas Instruments is disappointing, Visa has announced a buyback and Hilton is offering a cautious outlook.

• Investors are eagerly awaiting Meta and Amazon earnings calls. Meanwhile, economic reports and Fed decisions are set to influence markets.

Stocks saw gains yesterday, driven by better-than-expected earnings reports. The S&P 500 index rose by 0.7%, while the Nasdaq Composite registered a gain of just under 1%. Simultaneously, the bond market rallied, causing yields to edge slightly lower. The question loomed: would these earnings be sufficient to sustain the market's upward momentum, or were there underlying concerns?

Among the industry giants releasing earnings yesterday were Google parent Alphabet (GOOGL) and Microsoft (MSFT). Google reported a robust quarter, exhibiting an impressive 11% revenue growth, driven by an acceleration in ad sales. Furthermore, ad revenues from Alphabet’s YouTube TV experienced a notable 12% increase. However, the company fell short of expectations in its cloud computing division.

On the other hand, Microsoft delivered results exceeding forecasts, largely because of strong demand for its cloud services. The Azure business reported a remarkable growth rate of 29%, surpassing expectations. In premarket trading, Google's shares declined by approximately 6%, while Microsoft's stock witnessed a substantial rise of nearly 4%.

Stock in Snap Inc. spans back

Snap (SNAP), which had faced consecutive quarters of declining sales, managed to report a 5% growth in revenue, exceeding the expectattions of analysts, who had anticipated a 1.6% loss. Ad revenue played a pivotal role in this positive outcome for Snap, and the company also noted improvements to its ad platform. Consequently, Snap's shares were up by 3% in premarket trading.

Several other companies also reported earnings overnight. Texas Instruments (TXN) disappointed with its earnings results and presented a pessimistic outlook, leading to a premarket stock decline of nearly 7%. Shares of Visa (V) experienced a modest decrease of a little over 1%, even though the company exceeded estimates, thanks to robust international travel. Visa also announced a $25 billion stock buyback. Conversely, Hilton (HLT) reported earnings that surpassed estimates but offered a less optimistic outlook, with shares remaining unchanged in premarket trading.

The earnings season was set to continue dominating the headlines, with Facebook's parent company, Meta (META), scheduled to report in the upcoming evening. Following that, Amazon (AMZN) is slated to unveil its earnings results after the closing bell tomorrow. For Meta, attention was focused on its ad revenue numbers, considering the positive surprises from Google and Snap. Amazon's earnings were highly anticipated, offering insight into what to expect during the holiday season.

Crucial upcoming economic reports 

Amid the flurry of earnings releases, significant economic reports were also on the horizon. Reports on durable goods and pending home sales are due, with the latest personal consumption expenditures (PCE) report set for release Friday. The PCE report carries substantial weight in influencing the Federal Reserve's decision-making process regarding interest rates. While it was widely expected the Fed would maintain the status quo at its next meeting, the December Fed meeting will likely take into account the data presented in the report.

Looking ahead to the morning, Nasdaq and S&P futures were showing slight declines, accompanied by a 0.75% increase in volatility and a 0.25% drop in bond prices. Monday had seen the S&P 500 briefly dip below its 200-day moving average, only to rebound above it on yesterday. The technical significance of this development remained a point of interest. The heightened volatility, given the slew of earnings reports and economic data in the coming weeks, was also being closely monitored. As always, the advice was to adhere to your investment plan and long-term objectives in navigating this dynamic financial landscape.

JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan 

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