It was another mixed trading session on Wednesday, as investors digest a bevy of bank earnings before turning their eyes to different industries and sectors in the coming days and weeks. Given that we went a march to new highs on a seemingly daily basis for a bit, this kind of consolidation, albeit boring, is better than a pullback, right? We saw a 46 basis-point decline in the Nasdaq today, and similar action in other major indices.
Big tech remains in focus — with Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) on Capitol Hill. As the DoJ and others weigh potential antitrust charges against big tech, they are testifying before Congress.
It’s understandably hard for investors to bid these names higher with that type of event going on. But with Netflix (NASDAQ:NFLX) set to report earnings and the testimonies ending on Wednesday, big tech could be back in favor should NFLX react favorably.
Earnings, Earnings, Earnings
The focus has shifted from the Fed — which is still expected to cut rates — to earnings. We’ve mostly heard from the banks, but the focus will soon broaden. NFLX reports after the close, as does eBay (NASDAQ:EBAY) and International Business Machines (NASDAQ:IBM). We also have Microsoft (NASDAQ:MSFT) on Thursday.
For Netflix, analysts expect revenue to grow 26% to $4.93 billion and for earnings of $0.56 per share. For third-quarter guidance, the consensus is for revenue of $5.23 billion and earnings of $1.03 per share. Of course, with Netflix the key won’t just be the top- and bottom-line results. Subscriber growth will play a huge role too. Look to see if management lays out a plan (or at least comforts investors) on the idea that it can still do well without its top two shows next year, Friends and The Office, and amid plenty of growing competition.
Prime Day
If only we could get our hands on the specific numbers, but Amazon isn’t letting them out. At least, not yet.
What we do know is that Amazon sold more than 175 million items during the two-day event — delivery guys are going to love that… — while revenue topped that of Black Friday and Cyber Monday combined.
Let that sink in for a minute, just to realize how powerful of a sales event this has become.
When it comes to e-commerce, Adobe Systems (NASDAQ:ADBE) is left out all too often. That’s funny given that the company measures transactions for 80 of the top 100 U.S. internet retailers. According to the company, on Monday, “retailers that make more than $1 billion in annual revenues saw a 64% increase in their digital sales compared with an average Monday.”
Last year’s spike was 54%, so Amazon isn’t the only one making out. And before we think it’s just the big guys who are winning, Amazon said small and medium-sized businesses “far exceeded” $2 billion in sales.
Heard on the Nasdaq Today
On Tuesday, we noted the partnership between AT&T (NYSE:T) and IBM. Well, AT&T notched another deal, this time with Microsoft. The two have entered into a multi-year cloud and 5G deal worth more than $2 billion. They will collaborate together on 5G products, while AT&T will use Microsoft’s Azure cloud platform and its employees will use Microsoft’s 365 cloud app bundle.
Tesla’s (NASDAQ:TSLA) plans in China seem to be coming along faster than many had expected. When the automaker said it was hoping to begin production in Shanghai later this year, it drew the ire from a chorus of doubters. However, a recent trip from Morgan Stanley analysts seems to confirm that production could be up and running “faster than anyone believed.”
Construction should finish in September, allowing for full production to start in November, according to the analysts. If all pans out well for Tesla, analysts believe it can become the “leading luxury EV player” in the country. And before you assume Morgan Stanley is a mega bull on Tesla, it’s not. They have a neutral rating on the stock with a $230 price target.
Finally, Apple is testing production of its AirPods product in Vietnam, in what looks like an effort to lower its reliance on China. It will initially be on lower volume as the company works out any issues that may arise, and Apple has asked suppliers to keep their pricing unchanged during the trial.
Worth mentioning is that Apple has been producing its regular wired headphones in Vietnam for years, but began production of the AirPods in China.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell was long AAPL, AMZN, GOOGL and T.
