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PepsiCo Gives Hope At Start Of US Earnings Season, Dow Rises 350 Points

Published 14/07/2020, 05:45
Updated 21/10/2020, 09:15

If not quite at their initial highs, the markets nevertheless remained strong all session, including, inexplicably, the Dow Jones.

The US index appears to be benefiting – alongside the overnight Chinese automobile/remdisivir news – from a pivot towards earnings season.

It has to be something. Because the domestic situation is more alarming than it has been at any point in the pandemic so far. Florida just recorded 15,299 new cases IN A SINGLE DAY, while the country as a whole has crossed the 70,000 mark, moving closer and closer to the 100,000 daily infections Dr Anthony Fauci warned about a couple of weeks ago.

PepsiCo (NASDAQ:PEP), one of the first major firms to update, helped set the stage for a potentially better than forecast season in general. Revenues at the drinks and snacks giant fell 3.1% in Q2 to $15.95 billion –far greater than the $15.38 billion forecast. Adjusted earnings per share saw a similar beat, at $1.32 against analysts’ £1.25 estimates. While the drinks division is suffering from the impact lockdown has had on restaurants, a snack-happy populace has lifted sales of Cheetos and the like.

Though not part of the Dow's illustrious 30, PepsiCo’s report generated enough residual goodwill to help push the index 350 points higher, returning it to 26400.

PepsiCo’s performance could just be a one off, however. The bigger picture will start to emerge from Tuesday, when JP Morgan, Barnes & Noble (NYSE:BKS) and a surely dreadful Delta Air all report. Domino’s Pizza (LON:DOM), Morgan Stanley (NYSE:MS) and Bank of America (NYSE:BAC) are then on Thursday, with BlackRock (NYSE:BLK) on Friday.

Down from its morning peak, the DAX rose 1.1%, leaving it the wrong side of 12800. The CAC, on the other hand, actually improved, jumping 1.5% to 5030.

Like the DAX, the FTSE couldn’t quite remain at its intraday highs, though it was still up 1.3% to 6170.

Today the UK index was relatively untested; things start to get really busy for the FTSE from Tuesday onwards. The monthly GDP reading is set to swing from -20.4% to 5.0%, while investors will be very interested to see how lockdown favourite Ocado (LON:OCDO) has dealt with intense demand. Wednesday’s inflation is then set to hold at 0.5% month-on-month, with Thursday’s claimant count change reading ideally needing to come in below May’s 528,900 to reassure investors.

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