Stock Market Weekly Insights: Key Earnings and Trends
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Chapter 1: Market Performance Overview
In recent trading sessions, major players like Alphabet (GOOGL), Amazon (AMZN), AMD (AMD), Snap (SNAP), and UPS (UPS) reported significant profit increases. Conversely, companies such as Meta Platforms (FB), the parent of Facebook, and PayPal (PYPL) faced financial setbacks.
The market saw a lively response, particularly on Monday, as both the S&P 500 and Nasdaq demonstrated strong continuation of their upward momentum. This bullish trend persisted for a couple of days but faced a sharp decline following the disappointing earnings report from Meta Platforms. Despite this drop, companies like Google, Amazon, AMD, Snap, and UPS continued to excel. A surprisingly positive employment report contributed to a rise in the 10-year Treasury yield, reaching a two-year peak, while crude oil prices rose as demand surged amidst tightening supplies.
Section 1.1: Alphabet's Strong Performance
Alphabet (GOOGL), known for its flagship Google services, delivered impressive fourth-quarter results alongside the announcement of a 20-for-1 stock split on July 15. This strategic move could potentially pave the way for the tech giant's inclusion in the Dow Jones Industrial Average. The company's Q4 earnings per share (EPS) soared by 38%, and gross sales surged by 32% to $75.33 billion, both exceeding market expectations. Revenue from internet search and other services increased by 36% to $43.3 billion, surpassing forecasts of $40.95 billion. Meanwhile, income from cloud services rose 45% to $5.54 billion, slightly below the anticipated $5.57 billion. However, Google Cloud reported an operating loss of $890 million, which was larger than analysts' projections.
Subsection 1.1.1: Social Media Market Dynamics
The turmoil in social media stocks was triggered by the disappointing Q4 earnings of Meta Platforms (FB), which fell short of expectations across all metrics and reported a decline in user numbers for the first time. The aftermath saw FB shares plummet by 26%, marking the largest single-day market value loss in history. Other social media stocks, including Snap (SNAP) and Pinterest (PINS), also experienced declines, with Snap dropping 24% and Pinterest down 10%. However, both Snap and Pinterest later exceeded expectations with their performance on Thursday, leading to Snap's significant rebound on Friday.
Section 1.2: Amazon's Resilience
Amazon (AMZN) exceeded profit forecasts, bolstered by an $11.8 billion pretax valuation gain from its investment in Rivian (RIVN). While revenue grew by 9%, it slightly missed expectations. Cloud computing and advertising revenues, however, saw remarkable increases. Although stocks rose on Friday, they ultimately declined over the week.
Chapter 2: Corporate Strategies and Market Reactions
AT&T (T) announced plans to spin off WarnerMedia to its shareholders, setting the stage for its merger with Discovery (DISCA) in the second quarter. This new entity will operate under the name Warner Brothers Discovery, trading as WBD, but AT&T's dividend is expected to be cut by 46%, leading to a sharp drop in its stock price.
In the accompanying video titled "Weekly Stock Market Update," experts discuss the latest trends and insights from recent earnings reports.
The second video, "Best Stocks to Buy Now (& Sell): Weekly Stock Market Review," provides a detailed analysis of investment opportunities based on the latest market developments.
PayPal (PYPL) also struggled, as its earnings and total payment volume for the December quarter did not meet market expectations, despite revenues aligning with forecasts. The company's guidance for 2022, along with projections for customer growth, fell short, prompting PayPal to withdraw its five-year financial targets.