Daily Archives: October 24, 2021

Traders on the floor of the New York Stock Exchange (NYSE) in New York, on Wednesday, Aug. 11, 2021.

Michael Nagle | Bloomberg | Getty Images

An earnings avalanche is coming in the week ahead that could put the stock market's recent gains to the test.

Apple, Microsoft, Alphabet, Facebook and Amazon the biggest of big cap tech are among the 30% of the S&P 500 companies reporting. A third of the Dow also releases results, including Caterpillar, Coca-Cola, Merck, Boeing and McDonald's.

"Next week is the real test," RBC head of U.S. equity strategy Lori Calvasina said. "We're getting a little bit in every sector."

Of the companies that have already reported, nearly 84% beat estimates. Earnings are so far expected to be up 34.8% over last year, based on actual reports and estimates, according to I/B/E/S data from Refinitiv.

"The tug-of-war in good versus bad earnings reports has landed in favor of the market with the S&P hitting an all-time high [Thursday]. That may run into difficulty next week," National Securities chief market strategist Art Hogan said. "We may finally be seeing some cracks in the earnings season."

The S&P 500 and Dow Jones Industrial Average notched fresh records this week, and the indexes have solid gains for the week. The S&P 500 gained 1.6% to 4,544, while the Dow ended the week up 1.1% at 35,677, the first record close since Aug. 16. Some strategists view the return to those highs as a signal the market is on track for a year-end rally.

The Nasdaq Composite was also 1.3% higher for the week, but it was down 0.8% on Friday as tech stocks declined.

"I think we're going to learn a lot from this reporting season," Calvasina said. "So far, so good. Better than feared, with no change to underlying demand. Companies are still managing through for the most part. Investors are punishing companies that aren't, but they're not punishing the whole market. The market seems very rational right now."

For instance, Intel shares were pummeled, falling more than 11.6% on Friday, after the company's sales missed expectations. Intel warned an industry-wide component shortage hurt its PC chip business. But other semiconductor stocks did not get pulled down in the decline. The VanEck Semiconductor ETF was down about 0.8%.

But Snap sent an industry-wide warning Thursday when its quarterly revenues missed expectations. The company reported that Apple's privacy changes introduced earlier this year affected its advertising business. The company also said that advertisers were holding back due to supply chain disruptions and labor shortages.

Facebook's earnings on Monday will be closely watched for any similar comments, as will reports from Alphabet and Twitter Tuesday. The three stocks fell Friday as Snap plunged 26.6%. Facebook lost more than 5%.

"Facebook has been the more broken name. It had the Instagram problem. It had the kid problem. It's had a hard time going up post-earnings. It will be interesting to see if all these problems are priced in or does it go even lower," T3Live.com chief strategic officer Scott Redler said.

Redler said the Snap news was a big surprise, since traders viewed social media as immune to supply chain problems. Even though social media was under pressure as a whole Friday, he said stocks have been able to diverge within sectors recently.

"Tesla was able to make a new high, and Netflix is at an all-time high. Every group has winners and losers, but overall the participation is better than it's been in a while. Five stocks aren't driving the S&P to the all-time highs," he said. "It's a bunch of stocks in every sector."

Traders are now watching the Russell 2000, since a breakout in small caps would be a positive for the overall market, he said. Redler trades the the iShares Russell 2000 ETF (IWM) which closed slightly lower at $227.41 Friday. "If the IWM gets above the $230 to $234 area, it could be a signal for more risk on at the end of the year," he said.

Redler said the market could be challenged in the coming week. "You just had a big 10-day move up. You would think there will be some digestion," he said. "I don't want to chase the market here. It feels like we could rest a little bit next week. If it could digest here, and we could get some individual stock movement, that would be healthier than the pain trade, which is straight up."

There are a few important economic reports in the week ahead, including durable goods Wednesday; third-quarter GDP Thursday and personal consumption expenditures Friday. Friday's data includes the PCE deflator, the preferred inflation gauge watched by the Federal Reserve.

The closely watched 10-year Treasury yield continued to edge higher in the past week, touching 1.70% before falling to 1.64% Friday. Market pros are watching to see if the yield will reach 1.74%, the closing high from March, and whether it will begin to worry stock investors. The 10-year yield hit this year's intraday high of 1.776% on March 30.

"I would say over the next week or two, it's possible we test it, but I would be a little surprised at this stage if it sustainably breaks through," NatWest Markets' John Briggs said. He noted that yields have been moving higher, as investors now anticipate the Federal Reserve could raise interest rates next year and as the market anticipates more inflation.

"I get a sense that people are more interested in buying here rather than selling," he said. Bond yields move inversely to price. It could be a busy week in the market, as investors adjust for the end of the month

Briggs notes the front end, or the 2-year note yield, has moved faster than the longer end. He said that reflects the market's increased expectation for rate hikes next year, with two hikes expected by the market in the second half of the year.

Monday

Earnings: Facebook, Restaurant Brands, Otis Worldwide, Kimberly-Clark, Owens-Illinois, HSBC, TrueBlue

Tuesday

Earnings: Alphabet, Microsoft, Visa, Advanced Micro Devices, Texas Instruments, Twitter, Chubb, 3M, General Electric, Robinhood, Eli Lilly, UPS, Novartis, JetBlue, Lockheed Martin, Raytheon, Archer Daniels Midland, Sherwin-Williams, Invesco, Hasbro, Boston Properties, Teradyne, Fortune Brands, Hawaiian Holdings, NCR, Boyd Gaming

9:00 a.m. S&P/Case-Shiller home prices

9:00 a.m. FHFA home prices

10:00 a.m. New home sales

10:00 a.m. Consumer confidence

Wednesday

Earnings: Coca-Cola, McDonald's, Boeing, General Motors, Ford, Bristol-Myers Squibb, Kraft Heinz, Norfolk Southern, Glaxo SmithKline, General Dynamics, Brink's, Automatic Data, CME Group, International Paper, Penske Auto Group, eBay, Cognizant, Extra Space Storage, KLA Corp, Aflac, Harley-Davidson, Flex, Suncor, BioMarin, Community Health Systems, iRobot

8:30 a.m. Durable goods

8:30 a.m. Advance economic indicators

Thursday

Earnings: Apple, Amazon, Caterpillar, Comcast, Merck, Northrop Grumman, Altria, Intercontinental Exchange, Sirius XM, Yum Brands, American Tower, Gilead Sciences, Starbucks, Molson Coors, T. Rowe Price, Airbus, Anheuser-Busch InBev, Sanofi, STMicroelectronics, Volkswagen, Royal Dutch Shell, Stanley Black & Decker, AllianceBernstein, Check Point Software, Brunswick, Oshkosh

8:30 a.m. Jobless claims

8:30 a.m. Q3 advance real GDP

10:00 a.m. Pending home sales

Friday

Earnings: Chevron, AbbVie, Colgate-Palmolive, Lazard, Booz Allen Hamilton, Weyerhaeuser, Church and Dwight, CBOE Global Markets, Newell Brands, W.W. Grainger, Cerner, Aon, Charter Communications, Phillips 66, Daimler, Nomura, Eni, BNP Paribas

8:30 a.m. Personal income/spending

8:30 a.m. Q3 employment cost index

9:45 a.m. Chicago PMI

10:00 a.m. Consumer sentiment

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Big Tech earnings in the week ahead could test stocks' recent rally - CNBC

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 20, 2021. REUTERS/Brendan McDermid

Oct 21 (Reuters) - The Dow on Thursday eased from a record high hit in the previous session as IBM shares fell after its quarterly report, with the potential impact of supply chain disruptions and labor shortages on profits taking the center stage this earnings season.

The benchmark S&P 500 index (.SPX) edged lower, but was just about 10 points short of its early September record, while the Nasdaq (.IXIC) drew support from a rise in mega-cap growth companies.

"Stocks are climbing to new highs and anytime the market is trading at or near its all-time high, it is not unusual to see a little bit of more intraday volatility...and it should not concern investors," said Tom Mantione, managing director, UBS Private Wealth Management in Stamford, Connecticut.

Six of the 11 major S&P 500 sectors were trading lower, with energy stocks (.SPNY) falling the most.

IBM (IBM.N) tumbled 8.2% after it missed market estimates for quarterly revenue as its managed infrastructure business suffered from a decline in orders. read more

Investors are keeping a close eye on growth outlook from companies facing rising costs, labor shortages and supply chain constraints, with analysts expecting profit of S&P 500 companies to rise 33.7% from a year earlier, according to Refinitiv data.

"They (supply chain constraints) definitely are a concern. Things like semiconductor chips in particular have held back the economy to some degree and have put some upward pressure on inflation," said Jon Adams, senior investment strategist for BMO Global Asset Management.

Tesla Inc (TSLA.O) erased early declines to rise 3.0% as investors digested the EV maker's upbeat earnings, despite the company warning of supply-chain hurdles. read more

Other growth stocks including Facebook Inc (FB.O), Microsoft Corp (MSFT.O) and Amazon.com Inc (AMZN.O) were higher by early afternoon trading.

Data showed the number of Americans filing new claims for unemployment benefits dropped to a 19-month low last week, pointing to a tightening labor market, though a shortage of workers could keep the pace of hiring moderate in October. read more

At 12:00 p.m. ET, the Dow Jones Industrial Average (.DJI) was down 111.47 points, or 0.31%, at 35,497.87, the S&P 500 (.SPX) was down 2.15 points, or 0.05%, at 4,534.04 and the Nasdaq Composite (.IXIC) was up 38.84 points, or 0.26%, at 15,160.52.

American Airlines (AAL.O) rose 1.2% after posting a smaller-than-expected quarterly loss, while Southwest Airlines Co (LUV.N) fell 1.5% after it said it expected current quarter profits to remain elusive.

HP Inc (HPQ.N) gained 5.9% as brokerages raised their price targets on the stock after the personal computer and printer maker forecast upbeat fiscal 2022 adjusted profit and raised its annual dividend.

Declining issues outnumbered advancers for a 1.60-to-1 ratio on the NYSE and for a 1.22-to-1 ratio on the Nasdaq.

The S&P index recorded 48 new 52-week highs and no new low, while the Nasdaq recorded 84 new highs and 24 new lows.

Reporting by Shreyashi Sanyal and Devik Jain in Bengaluru; Editing by Arun Koyyur

Our Standards: The Thomson Reuters Trust Principles.

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Dow hit by IBM results, Nasdaq rises on gains in Big Tech - Reuters

If you need evidence that Big Tech firms are starting to worry about the growing movement to diffuse their immense market power, look no further than their newest scare tactic: using China as an excuse to avoid antitrust scrutiny.

Google, Amazon, Facebook, Apple, and the nonprofit proxies they pay to defend them have put a lot of effort into trying to convince America that subjecting Big Tech to more stringent antitrust enforcement or regulation would have dire consequences. Theyve warned that innovation would suffer, but that rings hollow when so many of the new innovative companies are already being bought up (and then often shut down) by Big Tech.

Theyve suggested that antitrust action might result in the loss of the free services weve come to depend upon. But how do they call their services free when we pay for them by giving them all of our personal data, which they store and monetize, and when they rely on our content to make their platforms valuable in the first place?

Big Tech firms have told us we should be grateful for the superior quality of their services, which could suffer if they were broken up. But then again, one could argue that Google Search was better before it was filled with ads.

YouTube was better before its algorithms tried to corrupt our children and amplify the reach of terrorists. Facebook was better before it censored people of faith and conservatives, while protecting those who post revenge porn. Instagram was better before it drove our teenagers to anxiety and depression. Amazon was better before it silenced conservative authors and raised questions about its influence on a multibillion-dollar defense contract.

Having failed with each of those claims, Big Tech has turned to a new bogeyman: China. Antitrust enforcement actions against Big Techor legislation aimed at restoring and protecting competition in Big Tech marketswould risk crippling Americas ability to combat the growing threat from Communist China, or so the line goes. The cynicism would be offensive if the argument werent so laughable.

Its not just lobbyists bringing these arguments to my office and others on Capitol Hill. Earlier this summer, former Google CEO Eric Schmidt said in an interview, These gross proposals like breaking them up and so forth, its not going to be helpful because its going to set us back against China.

Last month, the National Security Institute began a series examining the national security implications of antitrust challenges at home and abroad. The first panel featured Big Tech defenders suggesting the antitrust laws were written for late-19th-century monopolists and are too outdated to deal with Big Tech, and that Big Tech is a driver for research that is essential to national security. Antitrust scrutiny, they implied, might hinder the companies ability to compete with China, who wont be imposing the same restraints on their own companies.

Like every other excuse Big Tech has made, this too rings hollow and we should flatly reject it. That doesnt mean the antitrust laws should be enforced in the absence of actual anticompetitive harm. Nor does it mean that we should radically alter our antitrust laws to embrace a big is bad philosophy. But the idea that Big Tech should be treated with kid gloves makes no sense. The fact is, American ingenuity is strong enough to compete and win on the merits without coddling or amnesty from our antitrust laws.

Competition, and the innovation and disruption that facilitate it, are what made these companies American success stories. That same competition, innovation, and disruption are what will keep them at their best or make way for the next great American success story. You see, competition in Big Tech doesnt threaten American, it threatens the monopolistsand that makes America stronger.

Insulating American companies from competition out of a fear of foreign competitors will do the opposite of what Big Tech claims to want: we will be stuck with stagnant monopolists too complacent either to benefit American consumers or to protect us from foreign threats.

In fact, it is Big Tech companies themselves that pose the greatest threat when it comes to China. They not only cant protect us from foreign threats, but in some cases actively cooperate with them.

Google has been accused of working with the Chinese military, and has acknowledged developing a filtered version of its search engine to satisfy Chinese censors. Amazon has been working with a Chinese partner to expand its web-hosting services in the highly censored country.

The New York Times revealed earlier this year that Applewhich assembles nearly all of its products in China has stored data on Chinese government servers, shared customer data with the Chinese government, removed apps from its App Store to appease the Chinese government, and banned apps from a critic of the Chinese Communist Party. The Times also alleged that Facebook was courting the Chinese government in 2016 by developing a censorship tool. Facebook has admitted to sharing data with Chinese state-owned companies, and last year it undertook to expand its Chinese ad business.

These are the benevolent corporate heroes who are going to save us from the Chinese threat? Give me a break.

Far from saving us, it seems like the habits of their new Chinese friends are rubbing off on our Big Tech big brothers. In a way, Silicon Valley is helping America keep up with China: now we too have censored speech on the internet, constant surveillance, and tightly controlled marketplaces.

Instead of embracing the very crony capitalism that has been so destructive to American prosperity in the past, American firms should spend more energy competing on the merits for Americans business, and less time cozying up to Chinese bureaucrats. The free market should pick winners and losers, not Communist apparatchiks.

This whole episode leads me to only one conclusion: insisting that antitrust enforcers pull their punches or risk impairing our ability to face the threats from China is nothing short of corporate extortion, a protection racket at a global scale. What we need is more competition, and less protectionism. The only way we will defeat the economic threat of communist China is by empowering American businesses to challenge and disrupt the would-be Chinese collaborators that make up Big Tech.

The hypocrisy is glaring: Big Tech wants to assist Communist China in exchange for access to its economy, while pointing to the Chinese threat as an excuse for anticompetitive and monopolistic conduct in the United States. Americans deserve better, and we should refuse to entertain this disingenuous and insulting excuse.

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Big Tech Falsely Claims They're Protecting Americans From China - The Federalist

Another former Facebook employee on Friday submitted a complaint to the U.S. government, bolstering whistleblower Frances Haugen's recent criticism of the company in testimony to Congress and other formal complaints, and sparking fresh calls for accountability.

"It's time for immediate action to hold the company accountable for the many harms it's inflicted on our democracy."

The new whistleblower affidavit submitted to the U.S. Securities and Exchange Commission (SEC) was obtained by The Washington Post, which reports that the unidentified ex-employee accuses Facebookwhich may get a new name in a rebranding as early as next weekof prioritizing growth and profits over limiting the spread of problematic content.

"Facebook cannot govern itself," said Eric Null, U.S. policy manager at the group Access Now, in response to the Post's reporting. "The company repeatedly fails to live up to its promises, and, thanks to the whistleblowers and other prominent research, we have the receipts."

Null and other critics of the company were quick to reiterate demands for action by U.S. lawmakers and the Federal Trade Commission (FTC).

"Given what we now know about Facebook's singular focus on growth over addressing its destructive behavior, and that it has been perpetuating and causing civil rights-related harms, Congress and the FTC need to crack down on Facebook and all big tech companies," Null said. "Legislation, or FTC rules, should include strict data protection provisions that put an end to the pernicious hyper-targeting and data-obsessed advertising business model. Without it, Facebook, and Big Tech in general, will continue to wreak havoc at home and around the world."

Free Press Action co-CEO Jessica Gonzlez similarly said in a statement that "the latest whistleblower revelations confirm what many of us have been sounding the alarm about for years. Facebook is not fit to govern itself."

"The social-media giant is already trying to minimize the value and impact of these whistleblower exposs, including Frances Haugen's," she said, accusing the company of "conducting a serial cover-up of practices that put communities of color and other minorities at great risk for hate, harassment, violence, and disinformation campaigns."

Taking aim at the company's CEO, Gonzlez added that "not only are Mark Zuckerberg and other Facebook executives failing to protect our elections and keep our communities safe, they are failing to fulfill their responsibilities to the company's shareholders."

"Zuckerberg has made multiple appearances before Congress and nothing has changed," she said. "It's time for Congress and the Biden administration to investigate a Facebook business model that profits from spreading the most extreme hate and disinformation. It's time for immediate action to hold the company accountable for the many harms it's inflicted on our democracy."

The Post reports that the SEC affidavit alleges Facebook officials "routinely undermined efforts to fight misinformation, hate speech, and other problematic content out of fear of angering then-President Donald Trump and his political allies, or out of concern about potentially dampening the user growth key to Facebook's multibillion-dollar profits."

As the newspaper explains:

Friday's filing is the latest in a series since 2017 spearheaded by former journalist Gretchen Peters and a group she leads, the Alliance to Counter Crime Online. Taken together, the filings argue that Facebook has failed to adequately address dangerous and criminal behavior on its platforms, including Instagram, WhatsApp, and Messenger. The alleged failings include permitting terrorist content, drug sales, hate speech, and misinformation to flourish, while also failing to adequately warn investors about the potential risks when such problems surface, as some have in news reports over the years.

"Zuckerberg and other Facebook executives repeatedly claimed high rates of success in restricting illicit and toxic contentto lawmakers, regulators, and investorswhen in fact they knew the firm could not remove this content and remain profitable," Peters said in a statement.

The "most anguished line in the affidavit" relates to military officials in Myanmar using Facebook to spread hate speech during mass killings of Rohingya people, according to the Post. The whistleblower wrote that "I, working for Facebook, had been a party to genocide."

In a statement to the newspaper, Facebook spokesperson said that its "approach in Myanmar today is fundamentally different from what it was in 2017, and allegations that we have not invested in safety and security in the country are wrong." Asked about toxic content more broadly, she said that "we have every commercial and moral incentiveto try to give the maximum number of people as much of a positive experience as possible on Facebook."

Just hours after reporting on and reactions to the new affidavit, The New York Times revealed Friday evening that internal Facebook documents show "employees sounded an alarm about misinformation and inflammatory content on the platform and urged action" both before and after last year's U.S. election, "but the company failed or struggled to address the issues."

One internal report highlighted by the Timesand previously published in full by BuzzFeed Newswas about Facebook Groups, which, according to the new whistleblower, the company fails to adequately police. The report was specifically about users exploiting the Groups feature to "rapidly form election delegitimization communities on the site" leading up to January 6, when a right-wing mob stormed the U.S. Capitol.

"Hindsight being 20/20 makes it all the more important to look back," the internal report said, "to learn what we can about the growth of the election delegitimizing movements that grew, spread conspiracy, and helped incite the Capitol insurrection."

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New Whistleblower Sparks Calls to 'Crack Down on Facebook and All Big Tech Companies' - Common Dreams

The stream of Facebook privacy scandals may have you questioning how much the social network and other tech giants actually know about you.

Here's a hint: practically everything.

WebsiteSecurity Baronexamined the privacy policies of Facebook, Google, Apple, Twitter, Amazon, and Microsoft and put together a handy infographic showing the types of data each company admits to collecting. For Facebook and others,data is money. But just how much these tech giants actually know about you might be surprising.

As you can see in the infographic below, Facebook is particularly data-hungry: It gathers information about your work, income level, race, religion, political views, and the ads you click in addition to more commonly collected data points such as your phone number, email address, location, and the type of devices you use.

"Facebook is unusually aggressive," Security Baronpointed out. "This data can be exploited by advertisers and (hopefully not nefarious) others."

Twitter, in comparison, is "comparatively hands-off," the site notes. The microblogging service, for instance, doesn't collect your name, gender, or birthday (as Facebook, Google, and Microsoft all do), but Twitter does know your phone number, email address, time zone, what videos you watch, and more.

Google and Microsoft are the other big players when it comes to collecting data.

"With Cortana listening in and Gmail seeing all of your emails, the ubiquitous nature of Google and Microsoft gives them access to an uncomfortably large amount of your information," Security Baron wrote.

Check out the full infographic to see what Facebook, Google, Apple, Twitter, Amazon, and Microsoft may know about you. For tips on securing your digital privacy, check our story, "Online Data Protection 101: Don't Let Big Tech Get Rich Off Your Info.

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What Does Big Tech Know About You? Basically Everything - PCMag AU

Tesla CEO Elon Musk on Wednesday took a dig at big tech companies such as Google. Musk said, "most big companies in tech have turned into places where talent goes to die."Musk's tweet was in response to a tweet posted by user JD Ross, who accused Google of turning brilliant young techies into complacent careerists.This is not the first time that the tech billionaire has called out big tech. Earlier, Musk had blamed Facebook in a tweet for the violence at the US Capitol in January.On Tuesday, Twitter CEO Jack Dorsey threw shade at Facebook CEO Mark Zuckerberg and his recent announcement about the metaverse. Dorsey commented on a tweet giving the etymology term "metaverse," describing it as, "a virtual world owned corporations where end users were treated as citizens in a dystopian corporate dictatorship".

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Most big tech firms have become places where talent goes to die: Elon Musk - Economic Times