US Stock Markets Ended July 31, 2020

Bob Carey
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US Stock Markets Ended July 31, 2020

Posted Under: Weekly Market Commentary

Last week, equities were positive as mega-cap technology stocks led the way with a slew of strong quarterly earnings announcements. The S&P 500 index rallied 1.5% while the Nasdaq Composite index was up 3.5%. Apple Inc. managed to beat sell side revenue estimates by over $7.4b coming in at $59.7b compared to $52.3b estimated, pushing the stock 14.7% higher last week. Amazon.com Inc. also beat sell side estimates by $7.7b after announcing 2Q revenue of $88.9b compared to an estimated $81.2b as the stock rallied 5.1% last week. To put those two revenue beats in perspective only 79 different stocks in the S&P 500 index have $7b in total quarterly revenue. Apple management issued strong guidance for next quarter as demand continues to grow for iPad, Mac, iPhone, iWatch, and services segments. Amazon continued to experience higher demand for Prime as user growth strengthened and customer churn was lower than expected. Amazon managed to increase grocery delivery capacity by 160% in 2Q and hire 175,000 people. Facebook Inc. was up 9.9% last week after total revenue, ad revenue, earnings and monthly active users all beat estimates. The embattled social media giant managed to have a strong quarter despite many threats to advertising cuts from businesses who don't like Facebooks censoring policies. Alphabet Inc., the parent company of Google, was down nearly 2% last week after announcing revenue and earnings that were mostly inline with expectations. YouTube, search, cloud and advertising all met analyst expectations but didn't beat them by enough for the stock to rally like other mega-cap technology names. This was all during a week where the CEO of each of these companies testified in front of the U.S. Congress about potential anti-trust issues with their varying businesses. Looking ahead to next week, Bloomberg expects 133 names in the S&P 500 index to announce quarterly results. As earnings season continues, equity markets look to learn more about how much COVID shutdowns are harming U.S. companies.

Posted on Monday, August 3, 2020 @ 8:12 AM • Post Link	Share:
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.

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