PepsiCo Kicks Off Earnings Season on a Positive Note but Markets Sell Off

Tom Gentile

Posted in
Big Picture

By: Tom Gentile
July 12th, 2022

2 mins read

If anyone was thinking supply chain concerns, inflation, and more rate hikes to come was going to put a damper on companies’ earnings reports for Q2, PepsiCo (NYSE: PEP) is one company that disproves that.

PEP announced reported a better-than-expected quarterly profit and revenue and they also say they are raising their revenue outlook for the year.

Though his could be deemed by many great news, many analysts are saying that the concerns expressed in the opening paragraph to this piece are still there and the impact of those concerns are likely to be reflected in the third quarter earnings. I guess to those saying that is take the Q2 numbers with a grain of salt? Maybe, but all that is being expressed here is what the numbers are now.

JP Morgan Chase & Co and Delta Airlines are a couple of big names out this week and they are companies in two industries that are sensitive to interest rates and inflation concerns so the eps reports are to be focused on to see the market reaction to their numbers and their guidance.

Lack of a Catalyst

An article out from CNBC.com has info from an analyst at Truist and here is the paragraph that caught our attention.

“There’s a lack of a catalyst, a lack of a leadership right now,” said Truist’s Keith Lerner. “Growth is slowing, and global central banks are still in tightening mode, and I think that’s concerning the markets.”

We can’t argue that opinion and so it may take the CPI report due out tomorrow to be that catalyst. Or maybe we need a week or two of earnings and reports and guidance from major companies to be the catalyst for a move in either direction.

Boeing Jumps Today

Boeing shares climbed 8.8% as deliveries hit their highest monthly level since March 2019.

American Airlines said today it expects total revenue in the second quarter to top 2019 levels and their shares soared 11%.

The key is to keep an eye out for not only a company’s earnings and revenue, but their guidance as well, because even though the markets reversed in a bearish fashion this last hour or so of trade today, a good news story can provide a catalyst for a specific company to move higher on the day regardless of what the overall market is doing.

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