Why the S&P 500 needs Amazon to deliver on earnings – MarketWatch,

Why the S&P 500 needs Amazon to deliver on earnings – MarketWatch,


U.S. stocks have been approaching records again, just as a busy earnings week gets under way.

Trade and earnings optimism onMondayleft the S&P                                                                                                                                                                                                                      SPX, 0. 08%                                                                                                                                                          0.6% away from a July 26 record close of 3,0 25. 86. “A solid beat on earnings from Amazon is definitely needed to swing the S&P 500 into new highs, ”says ourcall of the dayfromPeter Garnry, Saxo Bank’s head of equity strategy.

The e-commerce retailer                                                                                                                                                                                                                      AMZN,– 0. 37%                                                                                                                                                           will report after Thursday’s closing bell                                                                                                                                                                                                                      AMZN,– 0. 37%,                                                                                                                                                           withsome worriedabout a strain on profits from one-day shipping costs and a slowdown in its Amazon Web Services (AWS) cloud- computing business. Increased regulatory scrutiny is also a worry.

“On the positive side AWS will most likely deliver strong growth and the advertising unit may surprise to the upside,” Garnry told clients in a note.

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But, he said, Amazon shares haven’t hit a new high since the third Quarter of 2018, which reflect increasing hesitation from investors about paying a 100% premium versus the overall equity market for the company.

Investor appetite for the shares, which closed Monday at $ 1, 785. , could ebb sooner rather than later, Garnry told MarketWatch in a follow- up chat. He advises watching for early warning signs of margin compression (when input costs rise faster that what the product earns) on AWS and slowing top line, or revenue, growth.

“I think currently Wall Street’s estimates for 2020 and 2021 top-line growth are a little bit too optimistic, because it will be increasingly difficult to grow at this rate and the competitive landscape is changing, ”said Garnry.



The market

Setting records looks like a stretch, with the Dow                                                                                                                                                                                                                      (DJIA,– 0. 06%                                                                                                                                                          , S&P                                                                                                                                                                                                                      SPX, 0. 08%                                                                                                                                                          and Nasdaq                                                                                                                                                                                                                      COMP, 0. 26%                                                                                                                                                          merelyinching up. In Europe, the FTSE 100                                                                                                                                                                                                                      UKX, 0. 76%                                                                                                                                                          is up and the pound                                                                                                                                                                                                                      GBPUSD,– 0. 2778 %                                                                                                                                                          is down asthe government pushes on with its Brexit plan.

Read:FANMAG is in and it’s a bubble, says this money manager

The chart

Ourchart of the dayfrom hedge fund Crescat Capital’srecently published quarterly letterhighlights cracks it sees in the stock market. Crescat Capital notes that micro-cap stocks – via the Russell Microcap Index                                                                                                                                                                                                                      RUMIC, 1. 35%                                                                                                                                                           – are down (% relative to large-caps since September) .

“They tend to be domestic-oriented businesses that have correlated strongly with the overall market throughout history. The S&P 500 looks like it is poised to play catch-up, ”said Kevin Smith, chief investment officer, and Tavi Costa, portfolio manager.


The buzz

Earnings are rolling out from consumer goods groupProcter & Gamble                                                                                                                                                                                                                      ************************************** PG, ( 3.) %,                                                                                                                                                           toy makerHasbro                                                                                                                                                                                                                      (HAS, ******) – 14. (%),                                                                                                                                                           Harley -Davidson                                                                                                                                                                                                                      (HOG, 5. 88%,                                                                                                                                                           conglomerateUnited Technologies                                                                                                                                                                                                                      UTX, 0. 95%,                                                                                                                                                           package shipper UPS                                                                                                                                                                                                                      UPS,– 4. 54%                                                                                                                                                          and McDonald’s                                                                                                                                                                                                                      (MCD,– 3. 54%,                                                                                                                                                           to name a few. After the close, we’ll get fast-food company Chipotle                                                                                                                                                                                                                      (CMG, 0. 26%                                                                                                                                                          and Snapchat parent Snap                                                                                                                                                                                                                      (SNAP,– 0. 93%.                                                                                                                                                           

Biogen                                                                                                                                                                                                                      BIIB, 35. 95%                                                                                                                                                          shares are soaring after the biotech said it willseek regulatory approval of its Alzheimer’s treatment. It also reported upbeat results.

Earnings previews:Intel,Microsoft

Disney’s                                                                                                                                                                                                                      DIS, ( 2.) ********************************************************************************************************************************************** (%) *********                                                                                                                                                           “Star Wars: The Rise of Skywalker” flick isalready looking like a hit, amid record advance ticket sales and as the internet devours the latest trailer.

GNC                                                                                                                                                                                                                      (GNC, 14. 88%                                                                                                                                                          is soaring on a report China’s Harbin Pharmaceutical                                                                                                                                                                                                                      600664, 0. 79%                                                                                                                                                          isweighing a bid for the vitamin retailer.

Read:CEO of this robo-taxi company believes it has the inside track on rivals

Existing-home sales are due later.

The tweet



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