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Microsoft : Earnings Beat Expectations

(Thu, 23 July 2020). Microsoft smashed earnings expectations last night, proving that there is a real foundation behind the tech rally since April. Tech stocks are on a tear an absolute tear with Microsoft posting jaw-dropping numbers in a record quarter.

The Dow Jones Industrial Average (DJIA) struggled on Thursday. Microsoft and Tesla smashed earnings expectations last night, proving this tech rally has foundations. New tensions between the U.S. and China could bring volatility today. So much for the cries of ‘dot-com bubble.’ Microsoft (NASDAQ: MSFT) beat earnings expectations last night. While this arguably proved to investors that the tech-lead charge has real foundations, the Dow Jones Industrial Average (DJIA) still turned lower on Thursday.

The news will give investors broader confidence in the market’s recovery. The tech rally isn’t just hot air; there are real fundamentals behind it.

Microsoft’s earnings were good news, but the U.S. stock market struggled to maintain momentum on Thursday. As of 9:40 am ET, the Dow had lost 58.7 points or 0.22% to fall to 26,947.14. MSFT was the third-worst stock in the Dow 30, with shares dropping about 1%. The S&P 500 dipped 0.06% to 3,274.02, while the Nasdaq’s 0.05% slide caused the tech-heavy index to tick down to 10,700.47.

Dow Jones tech giant Microsoft beat expectations across the board in last night’s report.

Revenue: $38 billion vs. $35.5 billion expected
Earnings per share: $1.46 vs. $1.36 expected.
Cloud: $13.4 billion vs. $13.1 billion

What’s more important is the big picture. With Microsoft and IBM beating expectations in cloud services this quarter, it’s clear the recent crisis has accelerated a digital future. The ‘sky-high’ tech valuations and strong rally since April reflect this foundational shift.

Tesla (NASDAQ: TSLA) also impressed last night, reporting a fourth-straight quarter of profits. That makes Tesla eligible for inclusion in the S&P 500. Elon Musk’s company beat expectations on the top and bottom line.

 

What to watch on the Dow Jones today

Fast-forward to today, and all eyes are on Thursday’s weekly jobless claims. The 1.416 million new filings exceeded expectations (1.3 million) this week as the economic crisis continued to ripple through the United States. Thursday’s reading was the 18th straight week jobless claims came in above 1 million. Lawmakers are edging closer to a new stimulus package with Senate Republicans reaching a tentative agreement late last night. We’re expecting the $600 weekly unemployment lifeline to be slashed as low as $100 – a move that could dampen consumer spending.

 

Tensions between the U.S. and China could squash stock market optimism

Elsewhere, tensions are rising between the U.S. and China. The U.S. gave China 72 hours to close its Houston consulate after allegations of spying. Robert Daly, director of the Wilson Center’s Kissinger Institute on China and the United States called it a “dramatic escalation in tensions” and said China will strike back.

It’s almost certain that China will retaliate. The most likely form of retaliation would be closing the American consulate in Wuhan. Indeed, Chinese foreign ministry spokesperson Wang Wenbin threatened retaliation overnight.

 

 

 

 

 

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