The latest earnings season kicked off with a bang
Subscribers to Chart of the Week received this commentary on Sunday, October 20.
We’re officially more than halfway through October, and earnings season is just starting to heat up. The past week ushered in a slew of big-name reports from nearly every major sector. October has sent major indexes to a series of record highs, but it’s not been without pump fakes. Amidst this volatility, earnings have proved to be arguably the biggest influence on the Dow Jones Industrial Average (DJI), Nasdaq Composite (IXIC), and S&P 500 Index (SPX), and below we’ll recap some of the biggest hitters on Wall Street so far this season.
In no particular order, four of the biggest names that have moved the market over the last two weeks are Delta Air Lines (DAL), Goldman Sachs (GS), Taiwan Semiconductor (TSM), and UnitedHealth (UNH), with a combined market cap of over $3 trillion.
Delta Air Lines reported a third-quarter earnings and revenue miss before-the-open, Thursday, Oct. 10. Earnings per share (EPS) came in at $1.50, below analyst estimates of $1.52. A grim fourth-quarter revenue outlook also missed the mark, with the company using the upcoming U.S. Presidential Election as the catalyst for an expected drop in travel. The shares managed to pare steeper losses to shed a more modest 1.1% that session, a large improvement from July and January’s post-earnings plummets of 4% and 9%, respectively. Since that dismal earnings report, DAL has bounced off its 20-day moving average to hit a four-year high of $56.48 this past Monday. It was interesting to see the flagship airline stock prove so resilient.
Goldman Sachs’ post-earnings performance ended just below breakeven on Tuesday, Oct. 15, brushing off its initial gains and third-quarter beat of $8.40 EPS. CEO David Solomon’s comments citing an "improving operating environment" provided an initial post-earnings pop to a fresh record high of $540.51, but a profit boost of 45% for Q3 wasn’t enough to maintain gains into the close. Two major pullbacks were supported by the 120-day trendline in August and September, while a bullish flag pattern is starting to form below that record peak.
Arguably the week’s most buzzy report, Taiwan Semiconductor (TSM) made headlines Thursday, Oct. 17, after an impressive third-quarter beat and a full-year revenue outlook that bested estimates, all thanks to rabid artificial intelligence (AI) demand. TSM’s EPS of $1.94 topped analyst estimates of $1.77, sending the equity to a 9.8% post-earnings swing higher, a bull gap that carved the way to a fresh record of $212.57. The report was so encouraging that the VanEck Semiconductor ETF (SMH) tacked on 1.7% yesterday, proving that a rising tide lifts all boats.
Finally, UnitedHealth had investors abuzz with its EPS of $7.15, beating expectations for earnings and year-over-year revenue growth of more than 9%. However, the earnings win was quickly brushed aside, as looming concerns regarding a recent cyberattack, rising prescription costs, and the need for conservation in 2025 to manage rate cuts to Medicare, resulted in a grim full-year outlook and subsequent steep loss on the charts. UNH gapped lower by 8.1% in response, falling to a three-month low of $543 but steadying to close at $556.30. UNH held its year-to-date breakeven level after the report and has since consolidated above this level, yet another company with solid financials that proved resilient on the charts.
Several earnings heavy hitters are headed up to bat over the next few weeks. Looking ahead, keep a close eye on 3M (MMM), AT&T (T), Boeing (BA), General Motors (GM), Verizon (VZ). If their technical resiliency is as evident as Delta or UnitedHealth in the face of earnings challenges, it bodes well for the long-term health of the U.S. economy.