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Q2 Earnings Season Kicks Off as These Leaders Surge: Stocks to Watch
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They say to never short a dull market.
The stock market has been eerily calm over the past few weeks as we head into the thick of the summer season. The month of June was the quietest month for stocks in nearly five years, with the S&P 500 failing to drop even half a percent on a (daily) closing basis.
In fact, we haven’t had a 1% decline (or greater) in the S&P 500 since April 30th:
Image Source: StockCharts
As we know, things don’t normally stay that peaceful in the market for long. Complacency has begun to set in as the second-quarter earnings season kicks off. The Q2 reporting slate will get underway this week with several of the megabanks highlighting the schedule.
It’s another busy week ahead with more inflation data due out to supplement the earnings results. The June CPI inflation report will be released on Thursday morning, followed by the PPI data on Friday. Fed Chair Jerome Powell will also testify before Congress on Tuesday and Wednesday.
Following last week’s jobs report, market participants are now pricing in a roughly 77% chance of a rate cut at the September meeting. The FOMC is widely expected to hold firm later this month.
Stocks have enjoyed a stellar run in 2024, expanding on last year’s start to this new bull market. Tech stocks continue to lead the way, with the Nasdaq advancing more than 22% through the end of last week. The S&P 500 earned a very respectable 16.7% over the same time frame.
Magnificent Seven Stock Performance
Despite the seemingly strong start to the year, individual stock performance has been a mixed bag to say the least. The major indexes have masked some underlying weakness, with breadth measures retreating over the past several months. Just 46% of stocks on the NYSE are trading above their respective 50-day moving averages, well below the 86% we saw at the start of the year:
Image Source: StockCharts
Depending on how we look at it, this can either be bullish or bearish. We don’t really like to see the major indexes hitting all-time highs with low participation, as it highlights the fact that only a small percentage of stocks are propping them up. On the other hand, weak breadth leaves room for improvement going forward as oversold pockets of the market have the potential to come back to life.
The weak breadth hasn’t stopped market leaders from outperforming. Just last week, five of the Magnificent 7 members touched new all-time highs – and that didn’t include Nvidia! It appears that the growth story for these companies is still very much in play.
Image Source: Zacks Investment Research
The one outlier in terms of Magnificent 7 performance throughout this bull market has undoubtedly been Tesla (TSLA - Free Report) . The stock was down more than 40% on the year by late April, but TSLA shares have come roaring back after stronger-than-expected Q2 deliveries along with upbeat sentiment surrounding the company’s Full Self-Driving (FSD) software and AI ambitions.
Notably, Tesla went from a Zacks Rank #5 (Strong Sell) to a Zacks Rank #3 (Hold) over the same time frame, reflecting the bullish change in earnings estimate revisions. Tesla is now positive on the year after the latest rip-roaring rally sent the stock 44% higher over the past month, regaining key technical levels in the process:
Image Source: StockCharts
Intelligence Stock Stages Breakout Ahead of Q2 Results
Outside of the Magnificent 7 stocks, intelligence software provider Palantir (PLTR - Free Report) broke out last week to a fresh 52-week closing high. The company builds and deploys platforms to assist in counterterrorism operations in the United States, the United Kingdom, and internationally.
Palantir has surpassed the earnings mark in each of the past six quarters. Analysts are expecting the Denver-based company to report second-quarter earnings in early August of $0.08/share, which would mark a 60% improvement relative to the year-ago period. Palantir has delivered a trailing four-quarter average earnings surprise of 4.17%.
PLTR shares have been volatile but are widely outperforming the market this year. The stock appears to be completing a cup-with-handle breakout pattern on above-average volume:
Image Source: StockCharts
Make sure to keep an eye on this intelligence leader as well as the continued success of the Magnificent 7 group as we officially kick off the Q2 earnings season.
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Q2 Earnings Season Kicks Off as These Leaders Surge: Stocks to Watch
They say to never short a dull market.
The stock market has been eerily calm over the past few weeks as we head into the thick of the summer season. The month of June was the quietest month for stocks in nearly five years, with the S&P 500 failing to drop even half a percent on a (daily) closing basis.
In fact, we haven’t had a 1% decline (or greater) in the S&P 500 since April 30th:
Image Source: StockCharts
As we know, things don’t normally stay that peaceful in the market for long. Complacency has begun to set in as the second-quarter earnings season kicks off. The Q2 reporting slate will get underway this week with several of the megabanks highlighting the schedule.
It’s another busy week ahead with more inflation data due out to supplement the earnings results. The June CPI inflation report will be released on Thursday morning, followed by the PPI data on Friday. Fed Chair Jerome Powell will also testify before Congress on Tuesday and Wednesday.
Following last week’s jobs report, market participants are now pricing in a roughly 77% chance of a rate cut at the September meeting. The FOMC is widely expected to hold firm later this month.
Stocks have enjoyed a stellar run in 2024, expanding on last year’s start to this new bull market. Tech stocks continue to lead the way, with the Nasdaq advancing more than 22% through the end of last week. The S&P 500 earned a very respectable 16.7% over the same time frame.
Magnificent Seven Stock Performance
Despite the seemingly strong start to the year, individual stock performance has been a mixed bag to say the least. The major indexes have masked some underlying weakness, with breadth measures retreating over the past several months. Just 46% of stocks on the NYSE are trading above their respective 50-day moving averages, well below the 86% we saw at the start of the year:
Image Source: StockCharts
Depending on how we look at it, this can either be bullish or bearish. We don’t really like to see the major indexes hitting all-time highs with low participation, as it highlights the fact that only a small percentage of stocks are propping them up. On the other hand, weak breadth leaves room for improvement going forward as oversold pockets of the market have the potential to come back to life.
The weak breadth hasn’t stopped market leaders from outperforming. Just last week, five of the Magnificent 7 members touched new all-time highs – and that didn’t include Nvidia! It appears that the growth story for these companies is still very much in play.
Image Source: Zacks Investment Research
The one outlier in terms of Magnificent 7 performance throughout this bull market has undoubtedly been Tesla (TSLA - Free Report) . The stock was down more than 40% on the year by late April, but TSLA shares have come roaring back after stronger-than-expected Q2 deliveries along with upbeat sentiment surrounding the company’s Full Self-Driving (FSD) software and AI ambitions.
Notably, Tesla went from a Zacks Rank #5 (Strong Sell) to a Zacks Rank #3 (Hold) over the same time frame, reflecting the bullish change in earnings estimate revisions. Tesla is now positive on the year after the latest rip-roaring rally sent the stock 44% higher over the past month, regaining key technical levels in the process:
Image Source: StockCharts
Intelligence Stock Stages Breakout Ahead of Q2 Results
Outside of the Magnificent 7 stocks, intelligence software provider Palantir (PLTR - Free Report) broke out last week to a fresh 52-week closing high. The company builds and deploys platforms to assist in counterterrorism operations in the United States, the United Kingdom, and internationally.
Palantir has surpassed the earnings mark in each of the past six quarters. Analysts are expecting the Denver-based company to report second-quarter earnings in early August of $0.08/share, which would mark a 60% improvement relative to the year-ago period. Palantir has delivered a trailing four-quarter average earnings surprise of 4.17%.
PLTR shares have been volatile but are widely outperforming the market this year. The stock appears to be completing a cup-with-handle breakout pattern on above-average volume:
Image Source: StockCharts
Make sure to keep an eye on this intelligence leader as well as the continued success of the Magnificent 7 group as we officially kick off the Q2 earnings season.