Editor's note: With energy surging higher, so are the odds of a rate hike by December. The odds currently sit at around 45%. Do you think we'll see a rate hike this year? Please write back to info@allstarcharts.com. We value your input and may include your comments in a future post. |
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The headlines will tell you earnings season is slowing down. And they're right... There are fewer reports, less noise, and not much on the calendar. But that doesn't mean nothing is happening. If anything, this is when the most important signals start to emerge. Because when the volume of earnings dries up, what's left behind is what actually matters… how stocks are reacting. And this past week gave us a little bit of everything. We saw strong companies get rewarded, weak stocks break down on good news, and a handful of names outside the S&P 500 quietly emerge as some of the most powerful trends in the entire market. In other words… The surface may look quiet. But underneath it, the market is sending some very loud messages. |
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What happened last week 👇 |
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- Monday:
- FedEx $FDX posted a double beat and closed higher for the 3rd consecutive quarter.
- Revenues grew 8% year-over-year, and margins continued to expand. Additionally, the management team raised its full-year guidance.
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- Tuesday:
- There were no S&P 500 earnings reactions to cover, so we highlighted one of our favorite growth stories outside of the S&P 500.
- The company's name is Planet Labs $PL, and it operates one of the largest fleets of Earth-imaging satellites in the world. And every time the company reports earnings, the stock surges higher.
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- Wednesday:
- Again, there were no S&P 500 earnings reactions to cover, so we reported on a rising star in the animal health industry.
- Its name is Phibro Animal Health $PAHC, and the stock is on the cusp of resolving one of the cleanest bases in the market. The fundamentals are confirming the strong technical uptrend as shareholders have been rewarded for 9 consecutive earnings reports, one of the longest streaks in the market.
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- Thursday:
- Following a double beat, Paychex $PAYX rallied 3% and snapped a 3-quarter beatdown streak. This is a stock that's been under pressure for months, falling nearly 50% from its 2025 peak. But now price has returned to its pre-COVID highs, and is attempting to hold that level as support.
- On the flip side, Cintas $CTAS also beat on the top- and bottom-lines, but had the opposite reaction. Instead of rallying on good news, the stock resolved a massive top.
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- Friday:
- Since there were no S&P 500 earnings reactions to cover, we wrote about one of our favorite stocks outside of the index. Its name is Fastly $FSLY, and it's a $4B software stock.
- FSLY is breaking out to new multi-year highs on the heels of its best earnings reaction ever last month, when the stock rallied 72% in a single session.
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What's happening next week 👇 |
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Earnings season is winding down… and once again, there's not much on deck next week. So instead of looking ahead, we're zooming out. Because right now, the story isn't about individual earnings reports. It's about the macro backdrop that's forming underneath the surface. With energy prices surging and geopolitical tensions escalating, the odds of a rate hike by December are climbing fast. |
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We're now looking at roughly a 45% probability. And if energy continues trending higher, we see no reason for that number to stop here. In fact, it likely goes higher. And that has serious implications. Because if rates are heading higher, the most interest rate-sensitive areas of the market, utilities and real estate, are going to feel it first. So let's take a look at how these sectors behaved last quarter… in what was a far more favorable environment. Let's start with utilities. |
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On the surface, the results were fine. About 51% of companies delivered double beats, roughly a third came in mixed, and just 16% missed across the board. Nothing special. But the reactions were overwhelmingly positive. |
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Exelon $EXC led the pack with a reaction score of 7, and Southern Company $SO wasn't far behind at 4.7. The buyers showed up virtually across the board, and even mediocre results were rewarded. But that's exactly the point... If a stock like Consolidated Edison $ED couldn't catch a bid while nearly everything else was working… What happens when the environment turns against the sector? Now look at real estate. |
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The fundamentals were even more mixed. About 39% of companies posted double beats, 42% came in mixed, and nearly 20% missed outright. And unlike utilities, the reactions were all over the place. |
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On one end, Equinix $EQIX delivered one of the strongest reactions in the entire S&P 500, with a score of 8.8. That's one of the hottest AI-driven real estate plays in the market. On the other end? Total destruction. Crown Castle $CCI was the worst in the group and is now trading at its lowest level in nearly a decade. CoStar $CSGP has been just as ugly, down roughly 60% from its highs and sitting at levels we haven't seen since 2019. So now ask yourself… If these stocks are already getting punished in a stable rate environment… What happens when rates actually start moving higher? That's the bigger picture. And it's exactly what we're diving into in the next Beat Quarterly. We're breaking down every sector, highlighting where the strongest and weakest reactions are occurring, and identifying the setups that matter most as we head into the next phase of this market. If this preview is any indication… There's a lot to unpack, so stay tuned for more. That's it for this week. Thank you for reading! -The Beat Team |
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STAY HUNGRY. STAY FOOLISH |
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