The earnings season is one of the most important periods in the market because it gives investors an indication about how the companies are performing. The earnings season kicked-off yesterday after Citigroup announced its Q2 performance. In the quarter, the bank reported earnings of $1.95 a share, which was slightly above the expected $1.80. Part of these gains were a result of the initial public offering of Tradeweb, a company it has a stake in. Without this, the bank would have reported earnings of $1.83. Its total revenue for the quarter was more than $18.76 billion and a profit of $4.79 billion. The Tradeweb IPO contributed $350 million to the company. In response to the release, the S&P 500 and the Dow rose as shown below.
Today, the earnings season started yesterday will continue and will see some of the biggest companies release their earnings. Some of the companies that will report are Blackrock, CSX Corp, Goldman Sachs, Interactive Brokers, Johnson & Johnson, JP Morgan, Morgan Stanley, Netflix, Progressive, UnitedHealth, and Wells Fargo.
Investors will look at a variety of things with these companies. For Blackrock, they will want to hear the management’s insights about cryptocurrencies. This is because the investment company had expressed its desire to move into the crypto industry. With Facebook and JP Morgan moving to launch their crypto, investors will want to hear what the management says about it.
For Netflix, investors will want to see whether the company is continuing its user growth. In the most recent quarter, the company announced that its members had grown to almost $150 million. Investors will want to see whether the company will cross the 150M subscriber mark. Further, they will want to hear about the company’s plan to compete as other companies like Disney and AT&T enter the streaming space.
For banks like Morgan Stanley, Goldman Sachs, and JP Morgan, investors will focus on the Fixed Income Commodities and Currencies (FICC) segment. In the past, this was the most profitable segment for big banks but in recent years, the segment has faded. Banks have blamed this on the low-interest rates. In the earnings, while the headline numbers like revenue and EPS will be of importance, investors will pay closer attention to FICC/
For Johnson & Johnson, investors will want to hear about the ongoing litigation. The company has been accused of being part of the opioids epidemic. In a presentation yesterday, Oklahoma said that the company should be forced to pay as much as $17.5 billion to clean the damage. The company is also facing another lawsuit related to its talcum powder and whether it caused cancer.
With all these companies releasing, the major indices like the S&P 500 and the Dow will likely see major movements in the coming days. Tomorrow, companies to watch will be the likes of Bank of America, IBM, Northern Trust, PNC Financial, and Texas Instruments among others.