Friday, July 31, 2020
Markets finish out a busy week in the heart of Q2 earnings season with plenty of other leaders across a spectrum of industries, plus a few new economic reports to give clarity to the tumultuous past three months. However, compared to the results from the Big Tech companies yesterday afternoon which outperformed analysts’ wildest dreams. Pre-market indexes are in the green across the board.
Personal Income and Consumer Spending for June both came in moderately worse than expectations, with income dropping 1.1% on the month compared to -0.8% anticipated and spending up 5.6% but below the 5.9% estimate. These figures come off an unrevised income headline of +4.2% last month and an upwardly revised May spending number of +8.5%.
In these figures we see the foundations of both employment quality and consumer confidence; a drop in personal income is usually a result of increased joblessness, but for last month it is more likely the result of increased re-hiring of low-level employment. Consumer spending, while relatively strong overall, has tapered a bit from the previous month.
The Q2 Employment Cost Index came in more or less in-line with expectations at +0.5%, down from the +0.8% reported for the prior month. That this number increases again adds to the idea that more hires are (were) underway in June, though not at necessarily high pay-grades.
Q2 Earnings at a Glance
Two supermajor oil & gas companies have released Q2 earnings results, both demonstrating the strong headwinds involved with a lack of demand in fossil fuels during Q2’s “stay at home” measures. ExxonMobil XOM posted -70 cents per share in the quarter, worse than the -63 cents in the Zacks consensus and the +73 cents reported in the year-ago quarter. Chevron CVX, a Zacks Rank #1 (Strong Buy) company ahead of earnings results, posted a much worse -$1.59 per share versus the estimated -93 cents, way down from +$2.27 a year ago.
Further, both fossil fuel giants missed widely on their top-lines as well: Exxon -9.63% from the Zacks consensus to $32.61 billion, while Chevron’s $13.49 billion fell 34% below expectations. Exxon shares are down 1.3% in Friday’s pre-market, while Chevron is down 4%. These stocks had already sold off 40% and 28% year to date, respectively.
For more on XOM’s earnings, click here.
For more on CVX’s earnings, click here.
Big Pharma has also been heard from this morning, with both Merck MRK and AbbVie ABBV posting Q2 earnings results. Here, both companies topped expectations on the bottom line — Merck $1.37 per share versus $1.14 consensus and $1.30 a year ago; AbbVie $2.34 per share beat by a dime and topped the $2.26 in the year-ago quarter — while Merck missed marginally on the top-line and AbbVie beat. AbbVie shares are up marginally, +8.5% year to date. Merck is up 2.5% in early trading but still down more than 10% from the start of 2020.
For more on MRK’s earnings, click here.
For more on ABBV’s earnings, click here.
Caterpillar CAT crushed it on both top and bottom lines this morning, with $1.03 per share blasting past the 66 cents expected, while revenues of $10 billion beat the Zacks consensus by 8.7%. However, shares are selling off 3% ahead of the opening bell, adding to the -7.4% year-to-date stock performance. For more on CAT’s earnings, click here.
Mark Vickery
Senior Editor
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