The second-quarter earnings season is in full swing now, with the peak of the reporting season this week.
Investor are on edge, since despite a typical upside surprise, overall S&P 500 Index earnings growth is expected negative for the fifth quarter in a row. FactSet estimates that the decline in profitability is expected to last into the third quarter as well.
There have been a number of high-profile earnings surprises and disappointments, resulting in volatility at a time when stocks — as measured by the NYSE Composite Index — remain near the upper end of a long three-year trading range.
Here are five large-cap stocks that have moved big.
Blue-Chip Earnings Movers: Apple Inc. (AAPL)
Apple Inc. (NASDAQ:AAPL) surged above its 200-day moving average on Wednesday for the first time since April after reporting a top- and bottom-line beat on Tuesday night. The result was driven by higher-than-expected shipments of iPhones and iPads.
I don’t expect the bounce to last.
Investors were encouraged despite the second consecutive quarter of falling profitability and sales. Even third-quarter guidance suggests that the weakness would continue as iPhone demand wanes (down 15% year-over-year) ahead the iPhone 7 unveiling. Sales in China were also soft. And margins declined (38% vs. 39.7% last year) as the iPhone SE weighs on average selling price.
Blue-Chip Earnings Movers: Boeing Co (BA)
Boeing Co (NYSE:BA) shares have broken strongly up and out of a five-month trading range by surging above resistance near the $137.50 level.
This after reporting a huge negative earnings surprise, posting a loss of 44 cents per share vs. a $2.24 gain expected and the $1.62 gain last year. What’s more, while revenues grew 0.9%, forward guidance was lowered.
The result was driven by charge-offs related to the 787 and 747 programs. Thus, investors focused on the revenue gain.
Blue-Chip Earnings Movers: Caterpillar Inc. (CAT)
Caterpillar Inc. (NYSE:CAT) shares have pushed up to levels not seen since early 2015 — breaking out of a four-month funk — after reporting a top- and bottom-line beat on Tuesday. Earnings came in at $1.09 per share versus 96 cents expected. Revenues totaled $10.3 billion versus $10.1 billion expected.
Investors ignored the fact revenue has been falling since late 2014 as the global mining and energy industries remain under pressure. The focus instead is on the company’s cost cutting efforts, with RBC Capital Markets analysts raising their target on the trimmed expense line.
Blue-Chip Earnings Movers: The Coca-Cola Co (KO)
The Coca-Cola Co (NYSE:KO) shares broke down out of their four-month trading range — breaking below their 200-day moving average for the first time since last August — after reporting a top-line miss, with sales down 5.1% from last year for the fifth consecutive quarterly decline.
Earnings, while they surprised to the upside, have also been in a downtrend.
Forward guidance was cut as well, with the company looking for fiscal 2016 earnings per share to decline 4% to 7% — which was below analyst estimates.
Blue-Chip Earnings Performer: McDonald’s (MCD)
McDonald’s Corporation (NYSE:MCD) dropped back below its 50-day moving average, reversing off of what looked like a possible upside breakout attempt, after reporting disappointing results suggesting the “all-day breakfast” initiative has lost its draw with consumers.
While earnings surprised to the upside and revenues matched expectations, investors frowned on the 3.6% drop in year-over-year sales and weak comp-store sales growth.
Shares had gained 32% over the 52 weeks through Monday, raising expectations for a continued turnaround that now seems to have stalled amid industry-wide pressures, competitive pricing and stretched valuations.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
