U.S. equities are taking a breather after a strong run higher in recent weeks, with the S&P 500 up more than 18% from the Christmas Eve low. Financial stocks are lagging, overriding the good feelings from a solid earnings report from Walmart (NYSE:WMT) which is helping alleviate concerns about a slowdown in consumer spending.
Specifically, the concern is around net interest margins with the futures market now pricing in Federal Reserve rate cuts as the post-2015 tightening cycle has seemingly come to an end. Also, traders are looking for actual evidence of progress in U.S.-China trade discussions.
As a result, the focus is turning to the handful of large-cap stocks that have lagged the market’s near-vertical rise, as these are the stocks that should lead the way down if any profit-taking materializes.
Here are seven to watch:
Click to Enlarge Amazon (NASDAQ:AMZN) shares have been mired in a sideways channel since early January, unable to break up and over its 200-day moving average. The pattern has been in place since October, keeping prices near the $1,600-a-share level.
The company has been in the crosshairs of political blowback for its labor policies and allegations of corporate welfare, culminating in the tech gian bailing from its HQ2 plans in Long Island City.
Shares are down 4.5% over the past month. The company will next report results on April 25 after the close. Analysts are looking for earnings of $4.74 per share on revenues of $59.7 billion. When the company last reported on January 31, earnings of $6.04 beat estimates by 53 cents on a 19.7% rise in revenues.
Morgan Stanley (MS)
Click to Enlarge Morgan Stanley (NYSE:MS) shares remain within the confines of a long-term downtrend that started back in March 2018, retesting the lows set in early 2017 and marking a near 30% decline from its prior high.
The company was recently downgraded by analysts at Societe Generale as the specter of lower interest rates and more market volatility weighs on earnings expectations.
Shares are down 5.6% over the past month. The company will next report results on April 17 before the bell. Analysts are looking for earnings of $1.37 per share on revenues of $10.7 billion.
When the company last reported on January 17, earnings of 80 cents per share missed estimates by nine cents on a 10% decline in revenues.
Click to Enlarge Qualcomm (NASDAQ:QCOM) shares suffered a decline to fresh lows in late January and early February, violating the November/December lows to return to levels seen in early 2018. This marked a loss of nearly a third from the highs seen in September. Analysts at Cowen remain cautious, noting that a number of legal and patent related issues need to be resolved before becoming more aggressive on the stock.
Shares are down nearly 6% over the past month.
The company will next report results on May 1 after the close. Analysts are looking for earnings of 70 cents per share on revenues of $4.8 billion. When the company last reported on January 30, earnings of $1.20 per share beat estimates by 11 cents on a 21.3% decline in revenues.
Click to Enlarge Verizon (NYSE:VZ) shares are within the confines of a multi-month downtrend pattern that started in November and has been saved from further weakness by critical support at the 200-day moving average.
Watch for resistance to materialize here near the 50-day moving average as it did back in January. The wireless carrier has been dinged not only for its ill-fated attempt to move into media (the Oath value write down and layoffs) but also the slowed rollout of the 5G standard on China security concerns.
Shares are down 3.4% over the past month. The company will next report results on April 23 before the bell. Analysts are looking for earnings of $1.16 per share on revenues of $32.3 billion.
When the company last reported on January 29, earnings of $1.12 per share beat estimates by three cents on a 1% rise in revenues.
Analysts at Citigroup recently downgraded shares in the wake of management’s warnings of macroeconomic uncertainty and currency volatility. Forward guidance was also weak.
Shares are down 3.6% over the past month. The company will next report results on April 24 before the bell. Analysts are looking for earnings of 46 cents on revenues of $7.9 billion. When the company last reported on February 14, earnings of 43 cents per share matched estimates on a 5.5% drop in revenues.
Activision Blizzard (ATVI)
Click to Enlarge Activision (NASDAQ:ATVI) shares are once again falling away from their 50-day moving average after being unable to manage a bounce out of its late December low. Shares are down by nearly one-half from the early October high following weak quarterly results and tepid forward guidance as it struggles to maintain momentum in games like Call of Duty and Overwatch.
Shares are down 5.4% over the past month. The company will next report results on May 9 after the close. Analysts are looking for earnings of 25 cents per share on revenues of $1.3 billion. When the company last reported on February 12, earnings of 84 cents per share beat estimates by 31 cents on a 7.6% rise in revenues.
Click to Enlarge Allergan (NYSE:AGN) shares stalled and threatening to fall through neckline support on a messy looking head-and-shoulders reversal pattern that would trace a decline down to the $100-a-share level — which would be worth a loss of roughly a third from current levels. The FDA’s approval of a Botox competitor from Evolus (EOLS) has weighed on sentiment in a big way.
Shares are down more than 9% over the past month. The company will next report results on April 29 before the bell. Analysts are looking for earnings of $3.56 per share on revenues of $3.5 billion. When the company last reported on January 29, earnings of $4.29 beat estimates by 14 cents per share on a 5.7% decline in revenues.
As of this writing, William Roth did not hold a position in any of the aforementioned securities.