Overview and Trends

According to the Labor Department release, U.S. initial jobless claims rose by 12 thousand to 1.43 million in the week ended July 25 vs. consensus-forecast for 1.51 million new unemployment claims. On top of that, the U.S. GDP shrank at an eye-popping 33% annually in Q2 2020 — by far the worst quarterly plunge ever. The important indicator fell 9.5% QoQ.

As a result, the Dow Jones Industrial Average closed more than 200 points down — though earlier it had seemed set for a much bigger fall.

Apple, Google-Alphabet, Amazon, and Facebook all reported their second-quarter earnings yesterday. All four tech companies reported better-than-expected numbers. Facebook beat Wall Street estimates for daily active users and reported double-digit revenue growth year-over-year, sending its stock soaring 8% in after-hours trading. Facebook’s GAAP EPS was $1.80 versus $1.39 expected.

Amazon blew our minds, with $88.9 billion in sales last quarter, but fell short on growth with Amazon Web Services. Amazon stock was up by as much as 6% in after-hours trading. Amazon’s GAAP EPS was $10.30 versus expectations of $1.50 per share.

Apple also exceeded Wall Street estimates for its fiscal third quarter. Apple's stock was up 5% and passed $400 per share for the first time in after-hours trading. Q3 earnings per share were $2.58 versus estimated $2.07.

It means so-called FAANG stocks will stay with us through these stormy times, and will lead stock market higher in the coming months intercepting the initiative from the more exposed to COVID-19 U.S. banks.

 

Company

The Clorox Company (CLX) is scheduled to report fourth-quarter fiscal 2020 results on Aug 3rd, before market open. In the last reported quarter, this sanitary chemical manufacturer delivered an earnings surprise of almost 10%. Moreover, it has been securing an earnings surprise of average 6.6%, over the trailing four quarters.

What to expect this time around? Clorox has been gaining from increased demand for hand sanitizers, disinfecting wipes, and other floor and house-cleaning products on the back of rising awareness of the COVID-19 pandemic. Driven by this sudden spike in demand, management in its last earnings call raised its view for fiscal 2020. Notably, management had projected sales growth of 4-6%, with organic sales growth of 6-8%. Moreover, fiscal 2020 earnings per share are anticipated to be $6.70-$6.90.

We noted that consensus-estimate for EPS is just $1.99 versus $1.67 last quarter, while actual number came at $1.89 per share in the quarter when sanitary and hygiene sprays and liquids became hot items only in mid-March, just two-three weeks before the quarter end. So, will there be a feeling of dancing in the ceiling?

This material is for informational purposes only and should not be construed as investment advice, nor should it be considered information sufficient upon which to base an investment decision. There are risks associated with trading and investing, including but not limited to the use of leverage, which may accelerate the velocity of potential losses. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. Financial markets are subject to rapid price fluctuations due to adverse political, social and economic developments. Financial transactions may not be suitable for all investors, depending on their financial sophistication and investment objectives. You should seek the services of an appropriate professional in connection with such matters. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete in its accuracy and cannot be guaranteed.

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