The S&P 500 has extended today’s gain to 38 points, or 0.5%. It has been 13 points lower at the lows as the market digests five big earnings reports from late yesterday and one from this morning. The reactions in those names:
- MSFT -5.5%
- META -8.9%
- GOOGL +7.7%
- AMZN -1.4%
- QCOM +16%.
- CAT +10.1%
The tech names are truly a mixed bag but I think the chip names are actually more important this point. The hyperscalers are incinerating cash but they increased capex again in the quarter and that’s a good sign for the $700 billion that’s flowing downstream from it.
For the broader market, I wonder if Caterpillar wasn’t a stronger signal.
“While there is increased uncertainty due to geopolitical events and elevated energy prices, our end markets have been resilient.”
At the same time, CAT itself cited AI capex as a big driver for its earnings, particularly in power generation.
Another notable name to report was Royal Caribbean Cruise Lines and shares of that company rose 6.7% in a positive view on the consumer.
“Consumers… remain very healthy, supported by excess cash, strong employment trends and a continued preference for consuming experiences over purchasing things,” an Jason Liberty, Chairman and CEO. “We are not turning the corner. We have turned the corner… the moderation that we saw has turned.”
Even on the war, he said the consumer only briefly dipped.
“The softer booking trends lasted for a few weeks, but we have now turned a corner,” Liberty said.
Today we get earnings from Apple, which has generally stayed out of the AI race but could stand to benefit from it if there is a meaningful change in on-device usage. Though some argue that AI could take us away from our phones.
As for the stock market, there is somewhat of a lift today from dipping oil prices, a lower USD and declining Treasury yields. Those are typical moves around optimism that the war is ending, though the headlines today don’t exactly support that.
