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Top 5 Things To Watch In The Stock Market This Week

Adam Lawrence
·5 min read

U.S. Stock Futures Edges Lower After Indices Closed At Record Highs

U.S. stock futures edges lower to start the week ahead, after the S&P 500 and Dow Jones Industrial Average closed at record highs on Friday. This came after a week of strong gains as bank stocks earnings topped estimates. Economic data were also instrumental in lifting the indices. Despite stocks trading around record levels, UBS recently said that the rally is far from over. In fact, UBS envisions the S&P 500 ending this year at 4,400. That implies a 5% upside above the benchmark index closed on Friday.

“While investing at all-time highs may be daunting for some, we believe there is more upside ahead…“Following two rounds of stimulus deployed in the quarter and the ongoing vaccination effort, there is growing evidence that U.S. economic activity is picking up. The latest jobs data, business sentiment readings, and retail sales all point to a strong recovery.”- UBS wrote in a note to clients

With strong economic data backing the recovery of the U.S. economy, Wall Street is expected to kick off the second quarter with a strong rally. However, the stock futures seem to paint a different picture in the stock market today. Investors started the week on a cautious note amid concerns that the rollout of COVID-19 vaccines was facing hiccups. The Dow, S&P 500 and Nasdaq futures are all trading in the negative territory, sliding 0.24%, 0.26%, and 0.37% as of 8:03 a.m. ET.

[Read More] Best Stocks To Buy Now? 4 Cyclical Stocks To Consider

Bitcoin & Dogecoin Are Still The Talks Of Wall Street

In the run-up to the Coinbase (NASDAQ: COIN) IPO last week, Bitcoin and many other cryptocurrencies have skyrocketed in prices. However, traders were woken up on Sunday morning to massive liquidation notifications. This is rather unusual as weekends are usually the time where traders take time off from trading. But that doesn’t seem to be the case last week. So, what happened?

Now, no one can be sure what led to the massive liquidation event. There were some speculations that the U.S. Treasury is looking to charge several financial institutions for money laundering through the use of cryptocurrencies. Another possible cause related to the decline in Bitcoin prices was the power outages occurring in Xinjiang, China. According to the Cambridge Bitcoin Energy Consumption Index, or BECI, Xinjiang represents nearly one-quarter of the global hash rate. Whether these are the real reasons behind the plunge remains to be seen.

Apart from Bitcoin, Dogecoin has been catching attention on Wall Street as of late. The 400% rally in a week has created another FOMO moment among traders and investors alike. Its rising popularity came partly as a result of the apparent support from Tesla’s (NASDAQ: TSLA) Elon Musk. Despite giving up a lot of those gains from last week, Dogecoin seems to make a comeback again as of Sunday. This came after a few companies have started to accept Dogecoin as a payment option.

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Netflix Earnings

Netflix (NASDAQ: NFLX) will be among the major names reporting results this week. The streaming giant is slated to report its first-quarter results on April 20 after the closing bell. Given that the company comes out as one of the best stay-at-home stocks, it has a new challenge. And that is to show that it can stay profitably. After all, vaccinations are picking up in momentum. Therefore, investors are wondering if the stay-at-home darlings like Netflix could continue to grow healthily.

That said, the big number to watch when the company reports tomorrow is its subscriber growth. Of course, the growth we’ve seen last year is unusual and clearly, not sustainable. In comparison, the results could look mild. In particular, the company guided 6 million new paid subscribers during the period. While producing new content during the pandemic continues to be challenging, the company’s multi-year deal with Sony Pictures to have access to its theatrical movies should bode well for NFLX stock.

While we continue to view Netflix as a long-term winner in the video-on-demand space, we remain hesitant around near-term factors including 1) risk to the pace of subscriber additions post-pandemic; 2) the pandemic’s effects on content releases into 2021; and 3) the impact of price releases on subscriber retention, especially given scaling of competing direct-to-consumer services, most of which are priced at a discount to Netflix,” Aaron Kessler, analyst at Raymond James.

[Read More] Best Dividend Stocks To Buy Right Now? 4 To Watch

Snap Earnings

Within the increasingly competitive social media landscape, Snap (NYSE: SNAP) continues to deliver. Snapchat got a boost with users spending more time on their devices during the pandemic. But it’s worth pointing out that the company could do just as well when the economy reopens. Why? That’s because the core use of the app actually coincides with users doing things. The more activities there are, the more pictures and videos users will snap.

Wall Street is optimistic about the quarterly figures where the firm reports its earnings on April 22 after the closing bell. Some of the key drivers of Snap’s upcoming quarterly result will be persistently strong user growth and ramping direct response advertising. Considering the strong growth metrics of the social media company, would you consider buying SNAP stock now?

Q1 Earnings Season Kicks Into High Gear

Earnings season kicked off last week when major banks reported quarterly results that have exceeded Wall Street’s already elevated expectations. Now, as the first-quarter earnings season ramps up this week, could we expect another week of strong earnings? Some of the big consumer names reporting are Coca-Cola (NYSE: KO), Chipotle Mexican Grill (NYSE: CMG), and Procter & Gamble (NYSE: PG).

If you are keen on reopening stocks, many airline stocks are also reporting earnings this week. They include United Airlines (NASDAQ: UAL), Spirit Airlines (NYSE: SAVE), Alaska Air Group (NYSE: ALK), American Airlines (NASDAQ: AAL), and Southwest Airlines (NYSE: LUV). There are also notable names in the industrial sector that are reporting this week. These include Lockheed Martin (NYSE: LMT), Honeywell (NYSE: HON), and Kimberly-Clark (NYSE: KMB). So, whether it is chasing cryptocurrencies or following a string of earnings, there is a lot to keep up with as the week gets underway.