With Amazon's (AMZN) earnings report Thursday night four of five of the FAANG names have now issued second quarter earnings. Apple (AAPL) will complete the quintet with its report Tuesday night. It has been a very mixed bag of news so far. Both Netflix (NFLX) and Facebook (FB) disappointed badly but Alphabet (GOOGL) and Amazon put up very solid reports.
Overall, earnings have been generally good so far this quarter but the market response has been inconsistent. It has been unable to produce sustained momentum on good news but also hasn't fallen apart on bad news. There has been some "sell the good news" action as well as "buy the dip" responses on poor opens.
A good example of the market inconsistency and choppiness lately is how President Trump's trade agreement didn't produce a sustained positive response. The critics questioned how much had really been agreed upon, but market players seemed to use the strength as a selling opportunity. It didn't help that Facebook had such a poor report.
Part of the reason for the recent trading action is that it is the middle of summer. There just isn't as much intensity in the market now as there is at other times. And August has a history of being slow and seasonally weak.
Amazon is acting like it has so often on its earnings reports. The market loves the positives in the story and the bears that complain about valuation are crushed again. AMZN will help the Nasdaq 100 Friday but it isn't likely to have too much overall market impact.
There are two other issues that will likely have more market impact. First is the action in semiconductors. Intel (INTC) is down sharply on several downgrades as its earnings growth decelerates, competition grows and products are delayed. Other chip names, such as Lam Research (LRCX) seem to be benefiting from Intel's troubles so it will be interesting to watch the group.
The second issue that will move the market today is the GDP report that is due at 8:30 a.m. ET. The consensus expectation is that second-quarter GDP growth will come in around 4.1% but many are anticipating something even more robust. The critics are lined up with their explanations about why this number is not meaningful, but it may influence perceptions about inflation and how quickly the Fed may raise interest rates.
Bonds have weakened over the past two weeks and are going to respond to the GDP news. While the market has been undaunted by rising rates so far it is something to keep an eye on as it could become an issue at any time.
Trading has been difficult amid the choppiness, although the overall tone of the market is positive and preventing a bearish posture. I'd like to see some better action in individual stocks but it is likely that momentum will continue to be muted in the near term.