Another "earnings season" is upon us... For those of you who don't know, earnings season is exactly what it sounds like.
Watch These Two 'Bullish' Stocks During 'Earnings Season'
By Vic Lederman, editorial director, Chaikin Analytics
Another "earnings season" is upon us...
For those of you who don't know, earnings season is exactly what it sounds like.
Every quarter, publicly traded companies need to report their financial results to investors. And about two weeks after a quarter ends, a large chunk of companies do just that.
This time, earnings season is coming at a key moment for the market...
In short, 2025 has gotten off to a rocky start.
The S&P 500 Index is down roughly 4% from its mid-December peak. And the tech-heavy Nasdaq 100 Index has fallen about 6% over a similar period.
A lot of investors are worried. And just about everyone is wondering...
Will we endure a long downturn? Or is the market about to bounce back once again?
As I'll explain today, I'm watching two companies to help answer those questions...
Both companies will report earnings over the next few weeks. And in my view, the market's next move depends on their results.
The Power Gauge is "bullish" or better on both stocks right now. But that could change if they release poor reports.
And if that happens, it could mean bad news for stocks in general.
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Regular readers know that Chaikin Analytics founder Marc Chaikin and I believe stocks will have another great year in 2025. But we both expect to see some volatility.
That's happening right now.
Wall Street wants the economy to thread a small needle...
You see, traders want to see lower inflation. But at the same time, these same traders are looking for continued consumer strength.
That sounds contradictory.
But if the economy can thread that needle, the Federal Reserve can keep cutting interest rates. And in turn, that would means continued corporate profits ahead.
Because of that, I'm watching two financial-related companies closely...
The first company is credit-card giant Visa (V). It's due to report earnings on January 30.
And the second is PayPal (PYPL). The digital-payments leader will report on February 4.
These two businesses have their fingers on the pulse of U.S. consumer spending...
Just about everything I buy touches either Visa or PayPal. That's true for millions of Americans as well.
Put simply...
If these two companies are struggling, we know that consumer spending is slowing.
Today, both companies earn at least a "bullish" overall rating in the Power Gauge. But as you can see below, that doesn't mean they tell the same earnings-related story...
PayPal gets a "bullish" grade in the Earnings category today. But Visa's rating for that category is currently "neutral."
Looking closer in the Power Gauge, it's clear why...
PayPal receives "bullish" grades for earnings growth, earnings surprise, and earnings trend. Meanwhile, Visa gets "neutral" ratings for earnings trend and earnings surprise.
In other words, PayPal has a history of beating Wall Street analysts' expectations. But recently, Visa has struggled to produce positive results.
Strong results from these two financial titans could mean more smooth sailing for the next quarter or two. On the flip side, a rocky performance would likely signal a longer downturn.
We're also looking for signs that the Fed has inflation under control. But ultimately, this earnings season, we need PayPal and Visa to show that consumer spending is strong.
That's why I'll be watching these two companies closely in the weeks ahead.
Good investing,
Vic Lederman
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.87%
7
14
9
S&P 500
+0.16%
52
269
177
Nasdaq
-0.32%
11
53
36
Small Caps
+0.19%
271
1125
505
Bonds
-0.04%
Materials
+2.23%
0
8
20
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are Bearish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+3.65%
Health Care
+1.76%
Materials
+1.68%
Industrials
+0.33%
Staples
-1.34%
Real Estate
-1.49%
Financial
-1.61%
Utilities
-1.99%
Discretionary
-2.07%
Communication
-3.12%
Information Technology
-4.85%
* * * *
Industry Focus
Innovative Technology Services
25
64
8
Over the past 6 months, the Innovative Technology subsector (XITK) has outperformed the S&P 500 by +11.23%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #2 of 21 subsectors.
Top Stocks
BILL
BILL Holdings, Inc.
ANET
Arista Networks Inc
EPAM
EPAM Systems, Inc.
* * * *
Top Movers
Gainers
MOS
+8.01%
RVTY
+7.74%
CF
+7.59%
CVS
+7.31%
HUM
+6.81%
Losers
MRNA
-16.8%
EIX
-11.89%
CEG
-8.5%
PCG
-5.53%
SMCI
-4.66%
* * * *
Earnings Report
Earnings Surprises
KBH KB Home
Q4
$2.52
Beat by $0.08
* * * *
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