Earnings Vs Uncertainty

The Q4 earnings season is playing a vital role in the overall sentiment and behavior of the investors in the U.S market in specific.


Netflix Inc (NFLX) couldn’t meet its target of subscribers during the 4th quarter of 2021. Consequently, the stock price witnessed an instant drop exceeding 20% of its value during the after-market hours. This not only affected the stock price, but we also witnessed major drops in the U.S indices.


Since then it was evident that the earnings will have a huge influence on the overall U.S economy, at least in the short run.

On the 1st of February 2022, Alphabet announced its Q4 earnings, reading an astonishing value of $30.69/share beating all expectations. The revenues on the other hand witnessed a 32% increase YoY, holding a value of $75.3Bio. Alphabet also announced a potential stock split of 20-for-1 for each of its Class A, Class B, and Class C stock.


Those releases triggered the risk on sentimental behavior of the investors, boosting (Figure 1) their confidence levels on the stock, which led to a 13% increase in its stock price.

Figure 1: TC Market Buzz Google Sentiment


Figure 2: TradingView, Alphabet stock price vs Nasdaq Composite Index


Accordingly, all major U.S indices (Figure 2) rallied and recorded increases exceeding 2% separately, whereby NASDAQ Composite Index increased from 14,880 to 15,150.


On another hand yesterday was a red day for Meta Platforms Inc, whereby Facebook witnessed a decline of 1 Billion subscribers in the past quarter, leading to a huge drop in the stock price during the after-hours trading session.


However, we have another important trigger this week, which is the Non-farm Payrolls, and Unemployment rates on Friday the 4th of February 2022.

Whereby the Unemployment rate is expected to remain unchanged at 3.9%, however, the number of jobs created for the month of January is expected to decrease from 199K to 145K.


In conclusion, given the previous effect on the market triggered by the earnings of some of the technology companies in the U.S, will this drop have a direct effect on the U.S indices? Or will the main focus of the investors be on the employment data tomorrow?


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