Wall Street inches higher, Twitter with stellar Q1 results

Summary:
- S&P 500 (US500) holds firm near YTD highs
- Twitter (TWTR.US) added 8 million active daily users in Q1 2019
- Lockheed Martin’s (LMT.US) updated FY guidance hints at high government spending

Tuesday’s trading in Asia and Europe was mixed with no clear direction seen across major stock market indices. However, the US equities bucked the trend on the back of solid quarterly reports from, for example, Twitter (TWTR.US) or Lockheed Martin (LMT.US). In turn, all three major US indices are trading higher at press time.

S&P 500 (US500) is recovering almost as fast as it was falling in the second half of 2018. The index is trading just 25 pts shy of its all-time high and may be set to test it in the nearby future. However, increased volatility may be looming ahead as Twitter launched earnings season for the US tech companies. Source: xStation5

Twitter expands active user pool, Trump once again targets company

Twitter (TWTR.US) is one of the US companies that have published their quarterly reports today before market open. The company generated revenue of $787 million against expected $775 billion. However, when it comes to social media companies the focus in mainly on the number of active users. Market consensus expected the number of daily active users (DAU) to increase from 126 million at the end of 2018 to 128.4 million. Twitter reported that DAU reached 134 million at the end of March. The company reported an EPS of $0.25 in the first quarter, beating street estimates by over 150%.

On the other hand, one of Twitter’s most famous opponents, and ironically very active user, once again accused social media site of discrimination. Donald Trump, the President of the United States, complained about Twitter discriminating and banning Republicans and urged Congress to take action. However, it seems unlikely that any action will be taken given that executives of the biggest social media companies appeared in Congress in September 2018 and addressed accusations already.

Twitter (TWTR.US) opened significantly above the resistance zone ranging $35-36 today. With no relevant resistance levels ahead the way towards 2018’s highs seems left open. However, one should keep in mind that earnings reports from the other tech companies are likely to impact valuations of the whole sector. Source: xStation5

Solid Lockheed Martin results boost US defense and aerospace stocks

Lockheed Martin (LMT.US) launched today’s session significantly higher following the release of quarterly earnings report. The US jet fighter manufacturer saw much higher revenue than expected in the first three months of the year. Sales reached $14.336 billion (expected $12.511 billion) while EPS of $5.99 was over 40% higher than the median estimate provided by Bloomberg agency. Increased production as well as maintenance activity (repairs etc.) concerning F-35 jet fighters is said to have a major impact on beating estimates.

To make the picture even more rosy the company decided to make an upward revision to its full-year guidance. Prior to the release market consensus pointed to full-year EPS of $19.60 but Lockheed Martin said that earnings will be at least $20.05. The company said that its order backlog inflated by $3 billion in the January-March period and that it expects a free cash flow of $5 billion for the full year ($1.86 billion in 2018). As Lockheed Martin makes a bulk of its sales on the government contracts the updated guidance hints that company expects strong government spending this year. In turn, companies that have a lot of deals with the US government, like for example Boeing (BA.US) or Raytheon (RTN.US) are moving higher along with Lockheed Martin.

S&P 500 top movers at 3:01 pm CET. Source: Bloomberg

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