Economy

Q2 Earnings in Focus

The Dow is ripping forward another 500 points Wednesday morning — following a 556-points gain Tuesday — largely on the earnings beats from two components: Goldman Sachs GS and UnitedHealthcare UNH. Market indexes look strong across the board, also assisted by more good news from pharma developers Moderna MRNA and AstraZeneca AZN and their vaccine candidates for COVID-19.

Goldman simply blew the doors off Q2 expectations, posting $6.26 per share on $13.3 billion in quarterly revenues which compare very favorably with the $3.97 per share and $10.07 billion in the Zacks consensus. It’s the biggest earnings beat for the bank in nearly a decade. Investment Banking, Equities and Deb Markets, as well as Fixed Income segments all outperformed — which is similar to what we saw on the positive side yesterday for JPMorgan JPM and Citi C. This is the third straight earnings beat for the investment bank major, and shares are up 5.5% in today’s pre-market. For more on GS’ earnings, click here.

UnitedHealthcare, another Dow component, also surpassed expectations on its bottom line: $7.12 per share stormed past the $5.18 estimate. Revenues of $62.14 billion, however, missed the Zacks consensus by 2.62%, though rose year over year from $60.60 billion reached in Q2 2019. When we say UnitedHealth doesn’t miss earnings estimates, we mean it — the company has not posted a negative earnings surprise since Q1 2008. For more on UNH’s earnings, click here.

COVID Vaccines on the Way?

Both Moderna and AstraZeneca report this morning positive developments with the creation of antibodies in their COVID-19 vaccine candidates. Moderna tested 45 patients and they all generated antibodies the block the coronavirus from reaching cells within the body, thus immunizing a person from the disease. AstraZeneca’s results are expected to be published tomorrow on its recent findings. Not only has this lifted pre-market stock prices for both drugmakers, but for Travel & Leisure majors like United Airlines UAL and Carnival Cruise Lines CCL.

Monthly Economic Data Healthy

A new Import Price Index for June has hit the tape this morning, as well, with a +1.4% headline outpacing the +1.0% posted the previous month. Stripping out volatile petrol (oil energy) prices, this number dips to +0.3%, still higher than the +0.1% expected. Exports for the month also came in at +1.4%. These numbers depict an economy picking itself up off the mat after months of COVID-related sequester.

Year over year, we see a slightly different narrative: -3.8% on headline Imports and -4.4% on Exports. These are pretty much in line with analysts’ estimates, and naturally include the very weak winter and spring months of this year, which took international trade to drastic, though temporary, lows.

The Empire State survey for July is also out, up 17.2 from a 10.0 expected. This is the best read of economic productivity since November 2018 in the U.S.’s 4th most populous state, New York — which, importantly, has the city with the first major hot spot of the coronavirus pandemic in the U.S. — and a real breath of fresh air from the extremely weak -78.2 registered in May.

Industrial Production and Capacity Utilization, both for June, surged past expectations: a headline of +5.4% on Industrial Production bettered the 4.1% estimate, the +1.4% reported for May, and the abysmal -12.53% from April. Capacity Utilization came in at 68.6%, above the expected 67.7% and above the worst-ever read (since 1967) in May of 64.8%. More evidence the U.S. economy — at least that which existed a month ago — continues to rebound.


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JPMorgan Chase Co. (JPM): Free Stock Analysis Report

UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report

The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report

Citigroup Inc. (C): Free Stock Analysis Report

AstraZeneca PLC (AZN): Free Stock Analysis Report

Carnival Corporation (CCL): Free Stock Analysis Report

Moderna, Inc. (MRNA): Free Stock Analysis Report

United Airlines Holdings Inc (UAL): Free Stock Analysis Report

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