Equities Outlook – Earnings season continues

US stock markets continue to capitalize on the weakness of the US dollar, supported by ongoing speculations that the Federal Reserve will downshift is aggressive monetary policy tightening. In this report we focus on the recent earnings releases from Microsoft (#MSFT) 그리고 General Electric (#GE). We conclude with a technical analysis of S&P500 index (#US500) sharing our views for the future development of its short-term horizon.

Microsoft earnings overshadowed by AI plans

Yesterday, Microsoft (#MSFT) delivered its second quarter earnings reports and the results pointed to a better-than-expected earnings per share figure but the revenue figure was reported below expectations. Microsoft shares are up by 1% since the start of the year and are currently found trading around the $240 range. Looking closer at the earnings results, the tech titan beat analysts’ earnings expectations of $2.3 per share by two cents, with the actual EPS figure standing at $2.32 for the quarter. When it comes to the Revenue, the company missed estimates of 53.12 billion by roughly $450 million, standing at 52.7 billion at the end of the quarter. Nevertheless, it is worth pointing out that the actual revenue for Q2 more than doubled when compared to the result of the prior quarter, indicating that despite a challenging economic environment Microsoft managed to deliver good results. Most profitable for the company were Productivity & Business Processes and Intelligent Cloud divisions, while Personal Computing segment underperformed. Noteworthy nonetheless, we that the Azure Cloud services sales growth slowed and could possibly continue to do so in the upcoming quarters. What captured analysts’ attention, however, were the comments in regards to the future outlook of the company. Prior to the earnings release, Microsoft announced that is extending its investment in the pioneering ChatGPT developer, OpenAI and according to reports the additional funding is estimated at roughly $10 billion. Microsoft CEO Nadella after the earnings report stated, “we are well positioned to capture the opportunities in AI used by customers like OpenAI” and pointed out the company’s intentions for integrating ChatGPT into the Azure cloud services for optimization. The push towards implementing and integrating AI solutions to existing, well-established services could help the tech giant excel and possibly lead the market in the coming years, emerging from a challenging environment ahead of its competitors.

General Electric beats estimates

General Electric (#GE) shares rose by more than 1% during yesterday’s session after the company delivered fourth quarter earnings report. The results showcased that GE managed to beat both earnings per share and revenue estimates in the fourth quarter, lifted by strong double-digit growth in total orders. More specifically, the adjusted EPS figure for Q4 was reported at $1.24 beating expectations of $1.15, and significantly higher when compared the previous quarter EPS results. Similarly, the revenue figure also exceeded analysts’ estimates, as it was reported at 21.8B beating expectations of 21.2B as well as the result of the previous quarter. The company managed to capitalize on an unprecedented ramp up in demand for top tier aviation technology components and services, with GE Aerospace division yielding the strongest orders, revenue 그리고 profit growth rates in the quarter. The Power division, mainly concerned with renewable energy solutions, also delivered robust results, however the wind power turbine units did not live up to expectations. Larry Culp the CEO of GE stated “looking ahead, GE is positioned to drive growth, profit 그리고 cash, and our outlook reflects our confidence in our businesses” yet at a somewhat moderate pace in 2023.

기술적 분석

#US500Cash 4-Hour Chart

Looking at #US500Cash 4-hour chart we observe the index finding support near the 3900 (S1) level last week and then surging towards the 4030 (R1) resistance level, but ultimately failing to break above it. Given the ascending trendline initiated on the 6  of January we hold a bullish outlook bias for the US500 as long as the price action remains above the ascending trendline 그리고 breaks definitively above the 4030 (R1) level. The RSI indicator below our 4-hour chart registers a value 51, showcasing that the market is currently indecisive. Should we see the bulls take initiative over the direction of the index, we may see the definitive break above the 4030 (R1) resistance level and a move near the 4140 (R2) resistance barrier. Should on the other hand the bears take over, we may see the break below the ascending trendline, the break of the 3900 (S1) support level and the move lower, closer to the 3780 (S2) support base.

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