Stock Traders Embrace Themselves For Another Earnings Week

US Stock Markets Fundamental Analysis

Stock bulls are trying to gain back some of the recent losses as Q1 earnings season gets off to a mixed start. As for the war in Ukraine, President Biden announced another +$800 million in weaponry for Ukraine on Wednesday, following an hour-long phone call with the country’s president, Volodymyr Zelenskyy. Biden said the new weapons package will include systems already deployed to the fight, as well as new artillery weapons, artillery rounds, armored personnel carriers and helicopters.

Earnings in Detail

In the USA, the big earnings highlight last week was JPMorgan which posted a -42% profit decline from last year, slightly worse than analyst expectations. Details include more than -$500 million in losses due to market volatility tied to Russia, of which -$120 million is attributed to extreme price moves in the nickel market last month.

Somewhat surprisingly, JPMorgan also took a -$902 million charge that it added to its loan loss reserves, a stark reversal from last year when it released $5.2 billion from its reserves. Executives say it was a preemptive move to guard against the increased odds of a “Fed-induced” recession. CEO Jamie Dimon stressed that they weren’t predicting a recession, but that ongoing inflation, the war in Ukraine, and higher interest rates are “storm clouds on the horizon” that need to be taken into serious account.

At the other end of the spectrum is Delta airlines which topped both earnings and revenue estimates as well as offering an upbeat outlook for next quarter. The airline noted that passenger revenue was running at about 75% of its 2019 levels but expects that to rise to 93% to 97% in Q2.

The reads are for March, which marked the first full month of the Ukraine war and caused gas prices to skyrocket, two things expected to weigh heavy on Consumer Sentiment. I should mention that the producer price index rose +1.4% in March and 11.2% from a year ago. Energy prices were the biggest gainer for the month, rising +5.7%, while food costs increased +2.4%.

Data to Watch

This week the calendar is jam packed for earnings and economic data. On the earnings front, top highlights will include Bank of America, J.B. Hunt, Pinnacle Financial, and Synchrony Financial on Monday; IBM, Halliburton, Hasbro, IBM, Interactive Brokers, Johnson & Johnson, Lockheed Martin, Netflix, and Prologis on Tuesday; Abbott Labs, Alcoa, Anthem, ASML Holdings, Baker Hughes, CSX, Kinder Morgan, Las Vegas Sands, Nasdaq, Procter & Gamble, Randstad Holdings, Robert Half International, Spirit Airlines, Tesla, and United Airlines on Wednesday; Alaska Air, American Airlines, AT&T, AutoNation, Blackstone Group, Charles Schwab, Danaher, Dow, Freeport McMoRan, NextEra Energy, Nucor, PPG Industries, The Progressive, Qualtrics, Quest Diagnostics, Snap, SnapOn, Tractor Supply, and Union Pacific on Thursday; and American Express, HCA Healthcare, KimberlyClark, Schlumberger, and Verizon on Friday.

As for economic data, key releases include the NAHB Housing Market Index on Monday; Housing Starts on Tuesday; Existing Home Sales on Wednesday; the Philadelphia Fed Index on Thursday; and the preliminary reads on IHS Market Manufacturing and Services PMIs. Have a blessed Easter Monday!