Fourth-quarter 2015 earnings reports coming from Internet leader
Alphabet <GOOGL.O> and Exxon Mobil <XOM.N>, an old-economy company
hit by falling oil prices, will spotlight the yin and yang of
If shares of Alphabet, Google's parent, rally in response to the
strong results that are expected, it could displace Apple <AAPL.O>
as the biggest company in the world. That would be ironic and a
confirmation of the move away from traditional companies to new tech
ones: Apple unseated Exxon when it climbed to the top of the list in
So far, the earnings reporting season has painted a bifurcated
picture of corporate health: social media behemoth Facebook <FB.O>
reported fourth-quarter revenues more than 50 percent higher than
those of the same quarter a year earlier, while oil major Chevron
<CVX.N> reported its first quarterly loss in more than 13 years.
As they have for several years running, companies are generally
beating expectations on earnings but doing so via cost cuts and
buybacks; the number of companies surprising analysts with
better-than-expected sales figures is far smaller.
Perhaps because of that, investors have muted their response to
earnings reports a bit while they ramp up trades based on more
global events, such as Chinese economic reports or oil price
declines and increases.
Though investors continue to bid up stocks of companies that beat
expectations and sell those that fail, the spread between their
performance has narrowed, said Jonathan Golub, chief equity
strategist at RBC Capital Markets in New York.
EARNINGS REPORTS AND JOBS NUMBERS
Alphabet reports earnings Monday. Its stock has moved on average 5.5
percent (sometimes up, sometimes down) following its previous eight
quarterly results. With a market capitalization near $517 billion,
such a move higher would catapult it over Apple's $536 billion.
The company's numbers are expected to shine.
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"For the past two quarters Alphabet has delivered strong results
beating analysts' estimates," said Peter Garnry, head of equity
strategy at Saxo Bank in Copenhagen. "Facebook's blowout
fourth-quarter results point to strong mobile and video numbers for
Other companies reporting earnings next week include Aetna <AET.N>,
Pfizer <PFE.>, Merck <MRK.N>, Anadarko <APC.N>, ConocoPhillips
<COP.N>, Occidental Petroleum <OXY.N> and General Motors <GM.N>.
On the economic front, the all-important U.S. employment report
expected Friday will close a week that includes key data on factory
activity and construction spending, car sales, services sector
growth and inflation.
The numbers come after data showed U.S. economic growth slowed
sharply in the fourth quarter with gross domestic product up at a
0.7 percent annual rate.
"Manufacturing is clearly weak, segments of manufacturing are in a
recession, so the one thing that continues to keep our head above
water on a GDP basis is the consumer," said Don Ellenberger, head of
multi-sector strategies at Federated Investors in Pittsburgh.
"Any sense of weakness in the payroll number or any of the
employment statistics we get next week would really be a cause for
(Reporting by Rodrigo Campos; Editing by Linda Stern and James
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