Weekly Update 4/18/2023
The Banks are Back?
JPMorgan beats earnings, leads Bank Stock Rally
NFLX, TSLA, BAC earnings this week!
Could the market power through a recession?
Weekly Meetings:
INVESTMENT CLUB TUESDAYS 7 PM (CCB140)
INVESTMENT FUND TUESDAYS 8 PM (CCB140)
(BOTH MEETINGS ARE OPEN TO THE ENTIRE STUDENT BODY)
—Market Madness—
How This Estonian Startup Beat Uber At Its Own Game | Forbes
S&P 500 closes higher Monday to kick off a busy earnings week
The S&P 500 rose Monday as traders combed through the latest batch of corporate earnings results, searching for clues on the health of corporate America.
The S&P 500 rose 0.33% to finish at 4,151.32, while the Dow Jones Industrial Average gained 100.71 points, or 0.3%, to end at 33,987.18. The Nasdaq Composite added 0.28% to settle at 12,157.72.
“There is a tug of war between those who are feeling optimistic that the Fed will soon be ending the rate tightening program because of softness that we’re seeing in the economy … with those who believe the Fed will be forced to raise rates longer because the economy is not in a sense, surrendering,” said Sam Stovall, chief investment strategist at CFRA Research.
Earnings season pressed on with results from State Street and Charles Schwab before the bell. Schwab shares, which have come under pressure amid fears that the brokerage firm may suffer a similar fate to Silicon Valley Bank, rose 3.9% on a profit beat despite a decline in deposits. State Street fell 9.2% after missing estimates on the top and bottom lines.
Wall Street is closely monitoring the health of financial names this earnings period after Silicon Valley Bank’s collapse last month spurred a liquidity crisis and rocked the broader sector.
Elsewhere, the S&P’s communication services sector slumped 1.3%, led to the downside by declines from tech giants Alphabet, Netflix and Meta Platforms. The Google parent company fell more than 2% as The New York Times reported that Samsung is weighing making Bing its default search engine.
Corporate earnings got off to a positive start last week as banking giants Wells Fargo and JPMorgan Chase beat expectations. The findings seemed to suggest that these behemoths are holding up against mounting recession fears.
As companies grapple with sticky inflation and higher rates, many investors have braced for a downbeat earnings season, but data from Bank of America suggests that companies so far are hanging on. Of the names that reported during week one, 90% topped EPS estimates. That’s the best beat rate to start earnings season since at least 2012, the bank said.
Google Stock Loses $57 Billion Amid Microsoft’s AI ‘Lead’—And Reports It Could Be Replaced By Bing On Some Smartphones
Alphabet shares are on pace for their worst day in over two months following a report indicating the Google parent company is in danger of losing a key multibillion-dollar search engine contract to Microsoft, as the artificial intelligence rivalry between the two technology giants rages on.
ChatGPT has possible upended Google’s historic search engine dominance.
Samsung is mulling a switch from Google to Microsoft’s Bing as the default search engine on its smartphones and tablets, the New York Times reported Sunday, putting a contract worth a reported $3 billion per year in jeopardy.
Though that represents just over 1% of Alphabet’s roughly $280 billion in annual revenue, it’s the latest indication that Google’s search engine dominance may be fading, with the Times reporting there was “panic” among Alphabet employees over the Samsung contract.
Alphabet shares slid as much as 4.1% in early trading Monday, shedding $57 billion in market capitalization, while Microsoft shares climbed 1.6%.
That continues a months-long trend of Microsoft’s stock outperforming Alphabet’s, as Microsoft shares are up 21% since the November launch of ChatGPT, OpenAI’s viral chatbot incorporated into Bing; Alphabet shares are up 10% during the same period.
Microsoft has an “early lead” in the artificial intelligence space as it exhibits a “renewed vigor” in the search market, Goldman Sachs analysts led by Kash Rangan wrote in a note to clients last month.
Microsoft announced in January it made a multibillion-dollar investment in OpenAI, reportedly infusing $10 billion into the budding generative AI company and taking what will be a 49% stake in the firm. Just three weeks later, Microsoft rolled out its integration of ChatGPT into Bing and its Edge web browser. Bard, Google’s answer to ChatGPT, has received more lukewarm feedback, with Alphabet shares tanking 7% on February 8 after the chatbot provided inaccurate information during a demo.
—CRYPTO CULTURE—
Bitcoin Sinks Below $30K Amid Dollar Jump, Mixed Q1 Earnings
Bitcoin’s (BTC) rally above $30,000 has stalled – at least temporarily.
The largest cryptocurrency by market capitalization was recently trading at around $29,500, off 2.6% over the past 24 hours. Bitcoin began sinking on Sunday and dropped as low as $29,292 before rebounding slightly, according to CoinDesk data.
Encouraged by mildly upbeat inflation data last week, investors sent bitcoin’s price over $30,000 for the first time since last June. The surge from $28,000, however, was “largely untested,” Joe DiPasquale, CEO of crypto-asset manager BitBull Capital, wrote in an email to CoinDesk.
“Even though it breached $30,000, the price was likely to look for support on the downside and potentially consolidate before another leg up,” DiPasquale said, adding that with bitcoin recently sticking around mid-$29,000, most indicators on hourly time frames, such as the Relative Strength Index and Stochastic RSI, hint at a spike upward.
“What the bulls will want to see is a strong bounce from between the $28,000 and $29,000 range and a reclaim of $30,000 in the coming days,” he said, although he also noted that bitcoin’s price could decline to $23,000 before rebounding. In that case, “it may take longer for the upside to materialize,” he said.
Coinglass data showed that traders who bet on shifts in price have liquidated over $32 million worth of BTC long positions since Sunday evening versus $1 million of BTC short positions. These types of long squeezes tend to send prices lower.
Riyad Carey, a research analyst at crypto data firm Kaiko, said that several macroeconomic factors, including Monday’s U.S. dollar jump and a mixed bag of first-quarter earnings results, might have sent bitcoin’s price downward. The U.S. Dollar Index and bitcoin’s price is negatively correlated, Carey told CoinDesk, adding that that correlation has decreased since the start of the year.