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Big Blue and Big Mac Front Revenue-Obsessed Earnings Week

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April 21, 2015

A revenue-obsessed earnings week continues, but the net effect so far has been a choppy market, dangling around the key 2100 line in the S&P 500 (SPX). We closed above that mark Monday by the skin, skin, skin of our teeth. Steady gold and oil trading overnight, as well as Asian and European stock market gains, could help set the early U.S. tone. But ultimately it will be some big-name earnings reports from tech firms and Dow fixtures that drive upcoming sessions. We’ve had some decent earnings so far, but it’s been the revenue picture that leaves traders uncertain quite what to do next.

FIGURE 1: BY A HAIR.

The S&P 500 (SPX) closed Monday just above the closely watched 2100 line as earnings season heats up. Data source: Standard & Poor’s. Chart source: TD Ameritrade’s thinkorswim® platform. For illustrative purposes only. Past performance does not guarantee future results.

Big Blue Comes Through (Sorta). Choppy early stock trading in IBM shares after it topped Street expectations with Q1 earnings but revenue fell 12%, marking the company's 12th straight quarter of year-over-year sales declines. Big Blue continues to shed its unprofitable businesses to focus on cloud-computing initiatives but growing pains have been, well, painful. IBM also reiterated its full-year EPS guidance of $15.75-$16.50 vs. a $15.89 consensus.

Extra-Value Earnings Meal. Several big names are still to report but among them McDonald’s (MCD) and Coca-Cola (KO). They just kind of go together it seems. Both could offer important insight on global growth projections and continued drag from a strong dollar.

No Neon Cheese. Whaaattt? Kraft (KRFT) is going au natural (or at least a baby step in that direction) by scaling back that freakish (hey, in a good way) orange that is a signature of its Mac & Cheese. This story has caught the Street’s eye for the sure human interest but it’s also a reminder that sometimes the most micro of stories are worth a closer look as we approach trading. This speaks to efforts in the giant packaged foods business to better reflect culinary trends. It’s also important to watch for deal churn as that can have individual company, sector, and broader market implications. Teva could make an unsolicited offer for rival Mylan (MYL) as soon as today, Bloomberg reports, in what could be the drug industry's largest takeover attempt this year.

Good trading,
JJ
@TDAJJKinahan

JJ Kinahan

JJ began his career in 1985 as a Chicago Board Options Exchange...

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