Earnings Season Underway
STOCK "BUY" OF THE WEEK
TICKER: ABNB; PRICE: $181.87
Airbnb, Inc. (NASDAQ: ABNB) engages in the management and operation of connecting hosts and guests online or through mobile devices to book spaces, predominantly short term residential rentals. The company went public in December, 2020, and it's a Silicon Valley darling.
While hotels continue to struggle during the pandemic, Airbnb has actually performed well.....read more
Earnings Season is Here:
Over 23% of the S&P 500 release results next week, so the markets will react. As the budding economic recovery accelerates after a soft patch early in the year, corporate earnings will get a boost from the upturn in the business cycle. U.S. GDP is expected to grow between 4%-5% this year, with the high-end more likely if further fiscal stimulus is passed. Even though the fourth-quarter earnings season has only just begun (13% of the S&P 500 companies have reported earnings as of 1/22), early results are encouraging, with companies so far reporting earnings 21.5% ahead of expectations.
Equities Continue to Soar:
With the tech heavy NASDAQ up over 4%, equities added to their solid nine-month gains last week. Major indexes reached fresh all-time highs. The recent two-and-half-month stretch from Election Day to the inauguration marks the strongest post-election performance since 1932, with the S&P 500 returning 14%.
It's About Vaccines and Stimulus:
We believe that two of the most important drivers of market performance this year will be the pace of vaccinations and size of additional fiscal stimulus. It's not lost on investors that the most favorable proposed policy aspects for stocks are front-loaded this year, while the ones that might trigger some indigestion, like corporate tax increases, will likely be postponed until the recovery is on surer footing.
S&P Trading at a Healthy 23 PE:
The S&P 500 is trading at almost 23 times this year's earnings, reflecting a high level of optimism from investors. Stocks have historically paused in the first 100 days after a new president is sworn in, with the S&P 500 returning about 1% on average since 1933, though performance has varied widely, reflecting the economic conditions at the time rather than the election results
And that's your one minute weekly market scoop.