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T3’s Market Wrap: Facebook Rips the Cover Off the Ball… Again

Tech earnings are still looking pretty good.

Facebook (FB) ripped the cover off the ball once again today, reporting third-quarter earnings of $10.3 billion, beating the $9.84 billion Wall Street consensus.

Earnings per share came in at $1.59, simply destroying the expected $1.28.

Expectations were very high for Facebook, so these numbers were downright astonishing.

Facebook shares rose about $3 in after-hours trading. Based on options prices at the close, traders were pricing in about a $9 move in Facebook shares.

So why didn’t Facebook move much?

As Scott Redler explained earlier today, Facebook moved quite a bit ahead of earnings, and “the pre-earnings run may have stolen from potential post-report gains.”

So even though Facebook is up at the time of publication of this report, I would not be surprised if it fell on Thursday.

Fellow giant Qualcomm (QCOM) also beat expectations on the top and bottom lines, and the stock rose modestly after the report.

These two reports, which come on the back of last Thursday’s huge beats from Alphabet (GOOGL), Amazon (AMZN), Intel (INTC), Microsoft (MSFT), and First Solar (FSLR) should have traders in a good for Apple‘s (AAPL) report, which hits after the close tomorrow.

Apple has been hovering around all-time highs for the past few days, but it dropped -1.3% as traders contemplate possible outcomes with earnings tomorrow.

Demand for the new iPhone X appears to be very strong, but we can’t say the same for the iPhone 8. Furthermore, it’s not clear that Apple can produce enough units to satisfy demand iPhone X demand.

On the negative side, Tesla (TSLA) reported a larger-than-expected loss. However, Tesla is such a unique company that it’s more of a “one off” situation that doesn’t say much about overall demand for technology products and services.

Tesla fell a quick $10 in after-hours trading, pushing shares below the 200 day exponential moving average for the first time since December 19, 2016.

Meanwhile, the Fed held interest rates steady, though it was fairly positive on the economy, which has traders thinking a December rate hike is still the table.

The Fed said the “labor market has continued to strengthen and that economic activity has been rising at a solid rate despite hurricane-related disruptions. Although the hurricanes caused a drop in payroll employment in September, the unemployment rate declined further.

The SPX, Nasdaq Composite, Nasdaq 100, and Dow Jones Industrial Average all hit new record highs today.

However, all finished off their highs, with the SPX gaining just 0.2% to finish at 2579.36.

The Russell 2000 fell -0.7% despite strength in the US dollar.

Gold rose 0.4% despite the Fed’s slightly hawkish tone. Gold mining stocks were basically flat.

Looking forward, we have two big events on the horizon.

The first, which we discussed above, is Apple’s earnings report, and I’d regard Nvidia‘s (NVDA) November 9 report as another big one to watch.

The second is President Trump’s nomination of the next Fed Chair, which could come as early as this week.

Reuters reported yesterday that dovish-leaning Fed Board member Jerome Powell is likely to get the job. And after the close today, the Wall Street Journal reported that Powell has been notified that he will be nominated.

So another day, more record highs, with the bulls still in control.

Ain’t it fun?