What to Invest In as Amazon & Apple Earnings Disappoint
Wealthpress Head Trader Roger Scott joined Midas Letter to analyze this weeks U.S. GDP data and earnings reported by the FAANG stocks, specifically Facebook, Inc. (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Netflix Inc (NASDAQ:NFLX), Alphabet Inc (Google) (NASDAQ:GOOG) (NASDAQ:GOOGL) as well as Microsoft Corporation (NASDAQ:MSFT).
Roger believes the GDP data and jobless claims has already been priced into markets as investors knew of the havoc the Coronavirus has reaped on the economy. What the world did not know 100% is how the major companies would be effected financially, and to what degree.
The S&P 500 Index (INDEXSP:.INX) as well as the other major North American indices traded lower after earnings from the “Top 5” tech companies failed to surpass investors expectations.
Apple reported Q2 2020 earnings of $2.55 /share with revenues of $58.3 billion. The earnings beat out estimates of $2.09 /share with revenues of $54 billion. Although the tech giant did not issue a financial forecast for Q2. This is the first time they haven’t forecasted in more than a decade, concerning investors that performance will suffer later this year.
Amazon.com reported Q1 2020 earnings of $5.01 /share with revenues of $75.5 billion. The earnings were estimated to be $6.36 /share with revenues of $73.4 billion.
Today’s drop in the U.S. equities follows the best month in 33 years on the S&P 500.
Roger believes traders should be prepared for a cool-off in U.S. equity markets with a corresponding rise in volatility shown on the VIX (INDEXCBOE:VIX). The opportunities, therefore, in the coming week for traders could lie elsewhere… in gold, in interest rates or non-directional option strategies.
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