Big Earnings After The Bell

October 29, 2020 09:33 AM
Heavy economic calendar day
Resurgence of Covid-19 sparking new restrictions
Jobless Claims were encouraging, dropping from last week
Equity Index futures

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Wednesday's Close

E-mini S&P 500 Futures (December): Settled at 3263.50, down 119.5

E-mini Nasdaq-100 Futures (December): Settled at 11,132.75, down 455.25

Since Tuesday's final hour, the selling has been steady, and the S&P’s inability to regain previous support, now resistance at 3406.75-3410. Yesterday, the S&P finished down by another 3.5%, mounting a loss of nearly 5% on the week. Whereas the NQ lost 3.9% yesterday, it has managed to shed only 3.8% on the week. Despite finishing the session on the lows, U.S. benchmarks stabilized overnight and staved off a repeat of Wednesday when the bloodbath began at the European open.

Today is the pinnacle of the week with a deluge of economic data, the ECB policy meeting, and earnings from the world’s largest companies. Things got off to a firm start with German Unemployment and Eurozone Confidence reads for October, all of which were better than feared. Although these are October numbers, maybe they eroded from better levels over the second half of the month, or they are simply lagging budding fears across the region due to the resurgence of Covid-19 and fresh lockdowns.

Domestically, Q3 GDP came in higher than most estimates at a record of +33.1% annualized versus a consensus of +31%. Estimates ranged from 20-40%. Regardless of the headline strong figure, the economy has struggled to rebound from the Q2’s -31.7% contraction and, like Europe, faces the resurgence of Covid-19 sparking new restrictions. Jobless Claims were encouraging, dropping from last week. 

Among a long list of companies to report this morning, ABEV, PCG, SHOP, and K are all holding ground to higher. In more deal-making news across the chip sector, Marvell agreed to buy Inphi. The supplier is tactically adding the 5G infrastructure and logistics company to expand its reach. Inphi is a stock we have liked a lot, and it is more than 30% on the news. Marvell, another stock we have liked, on the other hand, is down more than 6% premarket after closing Wednesday down 4.6% on the week and 12.2% from its record high on October 12th. The sharp drop should create a buying opportunity.

The big news comes after the bell when Apple, Alphabet, Amazon, and Facebook all report. Twitter also is set to announce earnings. Traders must prepare for added volatility. This week’s volatility, which is very common to see ahead of next week’s election and not surprising to see after Washington disagreed on a fiscal package, is also not unexpected ahead of the four behemoths reporting date. Remember, July 30th, when the group last reported, set the NQ on its path to melt-up through August.

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