Medicare Agent News: Big Oil Goes Green

Tuesday, October 25, 2022

Big Oil Goes Green

By Nicholas Jasinski | Tuesday, October 25

Trending Higher. For a third-straight trading day, stocks rose strongly through the session without a discernible catalyst for the gains. Investor positioning, mean reversion, key technical levels, and a low bar for earnings season likely have all contributed to the broad rally.

The S&P 500 rose 1.6%, as all 11 sectors closed in the green and 450 of the index's stocks rose. The Dow Jones Industrial Average added 1.1% and the Nasdaq Composite popped 2.3%. Bond yields' relentless march higher of late took a pause today, helping growth stocks in particular.

Seasonality is on investors' side these days as well. The November-through-April period is historically the much better half of the year for the market. Since 1961, that stretch has brought an almost 3,000% inflation-adjusted cumulative return for the S&P 500. The May-through-October return over the past six decades is only a cumulative 14%.

Here's Barron's Jacob Sonenshine writing today:

A larger rally might even be possible in the next couple of months, around the end of the year. That kind of bump is what Wall Street considers a “Santa Rally”--gains that come from folks funding their retirement accounts. For 95 years, the S&P 500’s average move in the fourth quarter is a 2.7% gain, according to Dow Jones Market Data.

But there is a caveat, and it goes back to the economic outlook. Positive signs should get things rolling. A more hawkish Fed or even hints of a slump, though, could push the kibosh on seasonality this year: The market tends to reflect a recession a few months ahead of when it actually lands.

In 2008, for example, the S&P 500 dropped 23% in the fourth quarter. In fairness, the financial crisis was just that--a crisis. The talk of a recession next year is for a mild one.

Read Jacob's full report here.

The biggest earnings news today landed after the bell, with results from Alphabet and Microsoft. The search giant missed revenue and earnings estimates, while the software behemoth narrowly topped both measures for the overall company but not for its key cloud segment. Both stocks declined in after-hours trading this evening.

Google advertising revenue was up just 2.5% year over year, to about $54.5 billion, missing expectations by $2.5 billion. Advertisers are evidently pulling back on marketing spending as the global economic outlook has worsened. YouTube ad revenue likewise fell short, while Google Cloud Platform revenue just edged out estimates.

Read more about Alphabet's third-quarter results here.

Microsoft's overall revenue was up 11%, to $50.1 billion. Adjusting for currency changes, sales would have been up 16%.

At Microsoft's closely watched cloud segment, revenue was up a solid 20% year over year, but analysts had been expecting more. The segment, which includes Azure, brought in $20.3 billion, below the Wall Street consensus and matching the bottom end of Microsoft management's guidance range.

"The results seem like clear evidence that the company’s cloud business is not entirely immune from a slowing economy," wrote Barron's Eric Savitz. Read his report on Microsoft's September-quarter results here.