Friday Energy Stocks Earnings Volatility Expected?

This week earnings season continues to be a wild ride. While the EPS beat rate are coming in strong, many stocks are reporting severe price declines even after posting decent results.

The latest one we saw this morning is Meta Platform. Meta faced high expectations heading into the report as its stock gains grew and estimates rose. So even though Meta beat revenue expectations for the latest quarter and essentially matched expectations with its outlook.

Meta issued a weaker than expected second-quarter revenue forecast, that send its shares and their internet peers down in Wednesday (24 April) after-hours trading. One factor is also Meta's heavy spending push, directed toward areas like artificial-intelligence hardware and the company's metaverse ambitions.

Meta Platforms Inc.'s earnings, which are sending the stock down more than 16% in the extended session, reflected a number of factors specific to the company.

As we have a few major energy stocks reporting their quarterly results, now traders’ eyes turn to big oil as earnings revenue decline are expected.

We have seen the volatility driven by tech shares last week only to see recovery this week (but will this recovery continue?), yesterday trading seems to suggest some weakness.

Dow Jone is down by 0.11%, NASDAQ only up 0.10% and S&P 500 almost flat at 0.02% green. We could see a not so ideal month for NASDAQ.

With this wild ride on earnings so far this week, especially from the tech stocks, sometimes it is just a “sell first, ask questions later” trading environment. When volatility runs high and market pessimism persists, managing risk is all the more important.

If we looked closely, we could see that shares of Snap Inc. are off more than 6%, while shares of Pinterest Inc. are down more than 5%. Shares of Alphabet , which reports earnings Thursday afternoon, are off about 3%.

We need to understand that negative forward guidance is even more impactful than other things as it usually has a knock-on effect. Traders and investors rely heavily on the opinions of Wall Street’s expert analysts when assessing a stock and their view is largely based on the guidance issued by companies.

Once lower management guidance is factored into their calculations, cuts in their estimates follow. Each cut will itself prompt selling when published, so the effects of poor guidance can last for weeks.

It has happened to Meta, so I personally would watch closely today for Alphabet.

We saw that oil futures finished lower on Wednesday as data from the Energy Information Administration showed weak demand for gasoline among U.S. consumers.

For the week ended 19 April, U.S. finished gasoline supplied, a proxy for demand, fell by 239,000 barrels a day to 8.4 million bpd, according to the EIA. That pressured oil prices, offsetting earlier support from a more than 6 million-barrel weekly drop in U.S. commercial crude inventories.

We have Chevron, Exxon Mobil and Phillips 66 releasing their quarterly report on 26 April 2024 before the market open. We have seen the latest market expectation that a fall in quarterly revenue would be expected.

But I think we might want to look at how these stocks have been trading prior to its earnings.

Chevron is expected to show a fall in quarterly revenue when it reports results on 26 April for the period ending 31 March 2024, it is expected to report a 0.3% decrease in revenue to $50.661 billion from $50.79 billion a year ago.

If we looked at how Chevron have been trading, it is gathering quite a good demand (buying) and we saw a MACD crossover before its earnings appearing, so this shows that market is not so concerned about the fall in revenue expectations.

I would think the demand for oil moving forward, given the geopolitical tensions is not defuse yet, and could we be seeing more conflicts?

Exxon Mobil Corp is expected to show a fall in quarterly revenue when it reports results on 26 April for the period ending 31 March 2024. It is expected to report a 9.5% decrease in revenue to $78.352 billion from $86.56 billion a year ago.

We are seeing XOM making a very nice upside move recently, and the demand (buying) are also increasing and going strong, only things that might affect the stock price is the downturn of the MACD.

MACD is not showing that the upside might continue, so this is something we might want to watch out for its earnings result and outlook.

Phillips 66 is expected to show a fall in quarterly revenue when it reports results on 26 April 2024 for the period ending 31 March 2024. It is expected to report a 5.7% decrease in revenue to $33.075 billion from $35.09 billion a year ago,

Phillips 66 are seeing demand (buying) diminishing and it has been trading pretty flat recently, and the MACD is suggesting a downwards movement. So Phillips 66 would need a very strong guidance for this quarter and 2024 for traders and investors to bring back their interest.

If we look at the overall performance on Wednesday, U.S. stock indexes turned mixed ahead of the final half-hour of trading on Wednesday, with the S&P 500 and Nasdaq Composite searching for a third straight day of advances.

This could show us that we might go for another mixed session today (25 April) and Friday, with the week ending in mixed performance. The weak gasoline demand has send oil prices lower for Wednesday session, so the geopolitical tensions does not have much impact on the oil prices.

I would think we might stay in the tech stocks and also looked out for the energy stocks for this week.

Appreciate if you could share your thoughts in the comment section whether you think tech stocks could help to push energy stocks to rally together?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.