Market Preview: Facebook Earnings Power Market Higher, Earnings from Apple and Starbucks On Tap

Facebook (FB) earnings, combined with assurances from CEO Mark Zuckerberg that margins would stop shrinking in 2019, soothed investor angst Wednesday and made Halloween not so spooky for the markets. The social media giant, which crushed earnings estimates, but missed slightly on revenue, said plans to further monetize Instagram and Messenger are in the works. The fact that the company missed on revenue, but placed enough stock in Zuckerberg’s plans that the company rose over 4% Wednesday, could mark a major change in tone for the markets. Investors were grasping for any news that would stop the tech slide, and Facebook appears to have stepped into the breach for now. Stepping away from tech, General Motors (GM) did its part Wednesday to bolster the market rally. The company earned $1.87 per share when analysts had expected $1.25. GM noted that tariffs and rising commodity costs are hurting numbers, but said strength in all of its market segments was sufficient to offset those costs. The stock was up over 9% by the close.

Investors hope Apple (AAPL) continues to fuel the market bounce when it reports earnings after the bell Thursday. Analysts have been raising earnings expectations for Apple the past few months, believing the company is selling fewer phones but at a higher price point. Investors will be looking for an update on the impact of the trade war. Also reporting Thursday are DowDuPont (DWDP) and Starbucks (SBUX). Analysts will be looking for the impact of rising commodity prices on the chemical maker’s earnings. While Starbucks investors will be looking for a reversal of the declining foot traffic the company has encountered. Comp sales were up just 1% last quarter.

Thursday’s economic calendar includes weekly jobless claims, Q3 productivity numbers, unit labor costs, the ISM Manufacturing Index, and construction spending. Productivity is expected to rise 2.3%, a slight decline from last quarter. Labor costs are expected to rise 1.1% after a 1% decline the previous quarter. The first Friday of November will usher in nonfarm payroll numbers and the unemployment rate. Unemployment is expected to remain unchanged at 3.7% with nonfarm payroll numbers clocking in at just over 200k. Also on tap for Friday are average hourly earnings, trade deficit numbers and factory orders. The trade deficit is expected to remain almost unchanged at $53.6B.

Friday the markets will focus on energy when Exxon Mobil (XOM), Chevron (CVX) and Duke Energy (DUK) all report earnings. With oil now down around 15% from highs set early in October,analysts will be looking for forecasts from these companies as to when they believe the decline will end. As a defensive stock, Duke Energy has performed well during the market selloff and is up just over 5% the past month. Also reporting Friday are Alibaba (BABA), Seagate Technology (STX) and Newell Brands (NWL).  

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