Weekly Analyst Update — February 1st

A negative week on Wall Street

• All three major indices finished last week lower, as the overall trend in markets was negative.
• The sell-off, which resulted in a weekly decline of 3.3% for the S&P 500, came despite the fact that Q4 earnings are beating expectations.
• Much of the weekly loss came during a sell-off on Friday, where firms including United Airlines, Principal Financial Group, and Charter Communications suffered 5% plus share price falls.
• In the Dow Jones Industrial Average, McDonald’s was the only stock to register gains on Friday.
• Apple finished the week 5.1% lower, dragging both the Dow Jones and the NASDAQ Composite lower.

Earnings beat fail to lift markets

• Tesla reported earnings last week, turning its 6th quarterly profit but tumbled after missing analyst expectations.
• The company’s statement for 2021 did not provide full guidance, implying deliveries of between 750,000 and 800,000, enabling Tesla to reach one million vehicle output in 2022, which shows huge growth.
• On top of this, recent policies introduced by Biden regarding EV’s is only set to provide a boost for Tesla.
• However, the TSLA stock slid more than 5% on Friday and registered a weekly loss of more than 7%.
• Apple delivered a positive earnings report last week, cracking the $100 billion in revenue for the quarter for the first time ever, but still finished lower for the week.

Bitcoin jumps on Musk’s Twitter bio

• After trading sideways throughout the week, Bitcoin finally had a breakout on Friday, rallying to reach as high as $38,000 at a certain point.
• The reason for the rally was Tesla founder Elon Musk, who changed his Twitter bio to the word “Bitcoin,” resulting in much speculation and giving crypto markets a boost.
• The rally, however, was short-lived, and Bitcoin retracted to levels similar to those seen last week over the weekend.

Oil holds steady

• Despite concerns surrounding the Covid-19 vaccine rollout effort, oil started this week in the green.
• Investors will be eyeing British oil giant BP, which is delivering its quarterly earnings update on Tuesday, after a three month period in which its share price has gained almost 40%.
• Over the past year, BP stock still remains down more than 40%, with its dividend yield running at over 5%.
• Key points to watch will be how well the firm has contained costs while the price of oil remains suppressed by the pandemic, and any plans it has to make changes to its dividend. Analysts are split between buy and hold ratings on the stock.

The Week Ahead

• Bank of England and Reserve Bank of Australia announce rate decisions (Thursday).
• NFP report and other job data published in the US (Friday).

Written by a team of experienced financial analysts at eToro.

This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results.