Earnings in Focus as Win Streak Snaps

The Daily Breakdown looks at US stocks as the S&P 500 snaps its winning streak ahead of an earnings selloff in Palantir. Can AMD help out?

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Tuesday’s TLDR

S&P 500 snaps win streak
PLTR falls on earnings
Visa bulls look for more gains

What’s happening?

The S&P 500 had its nine-day win streak snapped yesterday, but did a good job rallying off the lows. The SPY ETF is down again this morning, but we’ll see if it can muster up a bounce despite a sea of disappointing earnings reactions. 

In all honesty, it would be good to see a few days in the red, as the markets take a breather after a big rally. As of Friday’s close, the S&P 500 was up more than 17% from the April low, while it climbed more than 10% amid its multi-day winning streak. 

Bulls were hoping Ford, Hims & Hers Health, and Palantir would help lead the charge higher today. In pre-market trading though, all three names are lower after reporting earnings last night. 

We’ll have to see if Advanced Micro Devices and Rivian can recharge investors later today.

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The Setup — Visa

Last week, Visa reported a top- and bottom-line beat, with revenue and earnings growing 9% and 10%, respectively. Payment volumes increased 8% and management announced a $30 billion buyback plan as well. 

A few weeks ago, we talked about the surprisingly positive tone on corporate conference calls, particularly around the consumer. That trend continued with Visa, with CEO Ryan McInerney saying: “[Year to date through April 21st] We have not seen any signs of overall consumer spending weakening…all spend bands remain resilient and consistent with past quarters…Overall discretionary and non-discretionary spend remains strong.”

For Visa, MasterCard, and other credit card firms, that’s good news. On the charts, we’re also seeing some reassurance from investors, as V stock breaks out over downtrend resistance and regains its key moving averages, like the 21-day and 50-day.

Conservative bulls interested in Visa as an investment may prefer to wait for a pullback, while aggressive bulls may be interested at current levels. Either way, investors will want to see the stock stay above the mid-$330s. 

If Visa stays above this area, bullish momentum may continue. However, a break of this zone may usher in more selling pressure, particularly if volatility in the overall market picks up. 

Options

For options traders, calls or bull call spreads could be one way to speculate on support holding. In this scenario, options buyers limit their risk to the price paid for the calls or call spreads, while trying to capitalize on a bounce in the stock. 

Conversely, investors who expect support to fail could speculate with puts or put spreads. 

For those looking to learn more about options, consider visiting the eToro Academy. 

What Wall Street is Watching

PLTRShares of Palantir are down about 8% in pre-market trading, despite the firm beating on analysts’ earnings and revenue expectations. Further, management raised its full-year revenue outlook, now expecting $3.9 billion in sales. That said, the stock was up 63.5% year to date and came within pennies of hitting new record highs yesterday. 

GOLDGold is back in focus, as the GLD ETF climbed 3% yesterday and is up another 1.5% in pre-market trading. After tagging $3,500/oz and retreating back toward $3,200/oz, investors are wondering if gold can find renewed momentum and challenge its record highs yet again. Check out the chart for the gold ETF. 

DASHShares of DoorDash are tipping lower in pre-market trading, down about 5% after a mixed report. The company beat on earnings estimates, but missed on revenue expectations. The company also announced a $1.2 billion acquisition of SevenRooms, while this morning, Deliveroo said it agreed to a buyout by DoorDash for $3.9 billion.

Disclaimer:

Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.