Markets Fall To Start Big Earnings Week

Markets got off to a rocky start this week with all major indices down Monday after a strong week of trading last week. Tech stocks led losses with the tech-heavy NASDAQ dropping 0.98% on the day as earnings season ramps up. Banks kicked off earnings season last week with strong results across the board, however, Delta Air Lines gave a bleak first look into how airlines might have performed in the first quarter as the airliner missed on earnings estimates. This week even more big names are reporting quarterly performance as Coca-Cola (KO), International Business Machines (IBM), and United Airlines (UAL) have already released earnings for the first quarter on Monday.

Economic data is light this week with the weekly unemployment claims report being the most likely focus for investors.

Earnings Season Ramps Up

As earnings season continues, this week brings reports across various industries of the economy with some of the biggest telecom services and various tech stocks set to release earnings. Coca-Cola started the week off strong after the beverage producer surpassed earnings and revenue estimates. Additionally, United Airlines was the second big airliner to release quarterly earnings. United, sadly, also failed to meet analysts expectations as airlines struggle to recover from the pandemic even a full year later. The last major name that released earnings results on Monday was IBM which beat out earnings and revenue estimates when it reported EPS of $1.77 and revenue of $17.7 billion.

Two of the biggest cell phone providers, Verizon (VZ) and AT&T (T) are set to release earnings results on Wednesday and Thursday respectively. Verizon is expected to report earnings per share (EPS) of $1.28, slightly up from the $1.26 it reported in its year ago quarter and the $1.21 it earned last quarter. AT&T meanwhile is expected to have an EPS of $0.79, down barely from the $0.84 from its 2020 first quarter but up from the $0.75 last quarter. The steady cell service providers have been largely unaffected by the pandemic relative to most businesses.

Other big names set to release earnings reports this week include Netflix (NFLX), Intel (INTC), Johnson & Johnson (JNJ), Procter & Gamble (PG), and Southwest (LUV). Southwest will hope to prove the outlier among airlines by surpassing EPS estimates of -$1.87, for comparison of how much the pandemic continues to wreak havoc on airlines, Southwest reported an EPS of -$0.15 in the first quarter of 2020 that was still impacted somewhat by the beginning of the virus. Meanwhile inventors will be keeping a close eye on JNJ to see the initial impacts of its coronavirus vaccine being distributed, especially after the vaccine was discontinued from federal sites by the FDA and CDC last week after cases of severe blood clots in six confirmed patients.

Vaccine Updates

Despite the Johnson & Johnson vaccine being halted from use at federal sites and the FDA and CDC recommending the pause of its use at the state level, more than 3 million doses continue to be delivered every day. More than 84 million people have been fully vaccinated so far, while 131 million have received at least one dose of the vaccines. The 7-day average for doses administered per day is down slightly the past few days but that can also be attributed to just the way doses are reported on a weekly basis. Moderna (MRNA) and Pfizer (PFE) continue to increase the supply of vaccinations available and the average daily doses administered is up over 50% from where it was just at the beginning of March.

Claims

Initial unemployment claims are expected to increase slightly to 580,000 after last week was significantly lower than expected at 576,000 claims compared to estimates of 705,000.