Every Story You Need To See To Start The Week

This article was written by Morning Brew.

“You do not lead by hitting people over the head — that’s assault, not leadership.” ~ Dwight Eisenhower

MARKET SNAPSHOT: SPIN CYCLE

U.S. stocks finished on an upswing Friday, locking in their second week of sustained gains. Despite some positive signs, the market is going through a spin cycle--no real forward movement but lots of agitation. General Electric’s plan to shed its banking division (more on that below) helped the Dow and S&P 500 on Friday, but Wall Street still is on the hunt for a new catalyst to help it move forward. Will earnings season rise to the challenge? It seems unlikely. Oil kept its head above $50/bbl.

U.S. MACRO: PREVIEWING THE WEEK - ALL ABOUT EARNINGS

It’s Time for Earnings Season

Let’s take a break from the Fed, shall we? For the first time in weeks, the attention will be off economic data releases and what color shoes Janet Yellen is wearing, and squarely focused on earnings announcements. Overall, profits of S&P companies are expected to decline by 2.9% year over year. If true, that would be a worrying sign that corporate America is slowing down as more economic data continues to come in hot (and decidedly mixed) this week.

Related Link: 13 Stocks To Watch As Earnings Season Ramps Up

Story Lines to Watch

  • Banks are expected to be the lone bright spot, benefiting from mortgage lending and heightened trading volatility. Reporting this week are JPMorgan Chase & Co. JPM and Wells Fargo & Co WFC (Tuesday), Bank of America Corp BAC (Wednesday), and Goldman Sachs Group Inc GS (Thursday).
  • The energy sector will likely take a big hit from the drop in oil prices, while companies with large international exposure will be hurt by a stronger dollar.
  • Other notable companies will be posting reports: Intel Corporation INTC (Tuesday), Netflix, Inc. NFLX and SanDisk Corporation SNDK (Wednesday), Citigroup Inc C, American Express Company AXP and Schlumberger Limited. SLB (Thursday), General Electric Company GE (Friday).

Earnings season is a fast-paced time, but don’t fret--the Brew will be by your side all week long to keep you up-to-date on all the big earnings announcements.

CORPORATE PRIMER: GE CHANGING ITS WAYS

In one of the biggest corporate strategy moves in its 123 year history, GE has decided to shed a vast majority of its financial arm, GE Capital. Why? GE wants to differentiate itself from banking and increase its focus on industrial operations, which the company hopes will result in improved stock prices. Despite bringing in large profits, GE Capital had worsened GE’s valuation and outlook during financial crises. Looks like it was time for GE Cap to go. Just as hoped, the move had GE shares jumping over 10% on Friday. Look out for GE earnings this coming Friday for more discussion on the monumental decision.

CORPORATE PRIMER: WHAT WON'T GOOGLE TRY?

As Google broadens its business to include everything from wearable technology to self-driving cars, the company has encountered one persistent limitation--batteries. Oh, wait--not anymore. That’s right, Google Inc GOOGL GOOG is now developing batteries that are smaller, safer, and more powerful to support a wide range of new projects. A few examples to pique your interest: making Google Glass available as a contact lens, producing bendable phones, and beaming WiFi all over the world using balloons. The batteries would allow Google to take control of the supply chain for a host of products, although significant progress has yet to be made.

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