The Stock Market Upward Momentum Is Not Sustainable Yet

Netflix reported much better than expected numbers after markets closed yesterday.

The streaming giant notably ended its declining subscriber streak, adding more than double the new users that Wall Street was looking for.

Tesla

Tesla is the big earnings highlight today (reporting after the close) and there are worries that disappointing results could again dampen investors’ mood. The company already reported weaker-than-expected deliveries for the quarter so Wall Street doesn’t have overly optimistic expectations, so perhaps the surprise will be to the upside. Investors do however want to see some improvements on the supply chain front that have been a main cause of production delays, as well as forward guidance that shows Tesla will be able to make up those lost sales.

Many bulls hope that overall improved forward guidance from big companies during Q3 earnings will help calm investors’ nerves and lure more money back into the market. That may be a tough sell ahead of the key reports due next week, which will include some of America’s and the world’s biggest companies.

Apple, which according to a report yesterday has cut production for some of its new high-end iPhones due to weak demand. Big tech and other companies that do business overseas also face major currency headwinds due to the unrelenting strength of the US dollar. Some insiders are worried that this could end up putting a bigger dent in corporate profits than many on Wall Street are currently anticipating.

Data to Watch

Aside from Tesla, other earnings due out today include Abbott Laboratories, Alcoa, ASML Holdings, Baker Hughes, IBM, Kinder Morgan, Lam Research, Las Vegas Sands, Nasdaq, NextEra Energy, PPG, Procter & Gamble, Prologis, and The Travelers Companies. On the economic data front, Housing Starts and the Fed’s Beige Book are the key releases.

Big names tomorrow include AT&T, Blackstone, CSX, Dow, Danaher, Tractor Supply, Union Pacific, Phillip Morris, SNAP. I’m still look for more of a bear market rally that may last a bit but ultimately followed by another leg lower.