With all the major US companies have already reported their earnings for the second quarter of 2018, the market participants had already begun to ask what might drive the prices in the next 2-3 months.
Notable events from the earnings season
Obviously, we’ve had some good and bad news as well. The most important thing to mention is that Apple became the first US company to reach $1 trillion in market valuation, a record milestone praised by all its major investors, including Warren Buffett. Apple continues to be a successful business model, a fact proved by the financial report published by the company.
Probably one of the worst news of the earnings season came from Facebook, which had seen its shares dipping by more than 20% after its release of the report. After the Cambridge Analytica scandal, the company had seen a decreasing number of users and various accusations regarding the way it collects and uses personal data.
According to the report, Facebook expects regulatory measures to weight on the company’s activity in the next few years and also returns will also go on a downward path.
Techs had been in the center of attention, with Amazon continuing its ascension, despite reticence from various analysts. The company continues to perform better than expected and the share price had risen since it had reported the second quarter earnings, approaching the 2,000 US dollars per share milestone.
What might happen next?
People who trade shares are now eager to find out what could influence the prices over the near term. Probably the main thing to watch will be the trade war between the United States and China. Currently, the news is suggesting that both parties want to find a mutual agreement, with a summit rumored to take place in November this year.
Uncertainty is expected to be at high levels since the US President Donald Trump looks determined to bring down the commercial deficit with China. Also, China does not want to make concessions, which is why it had a tit-for-tat approach thus far, implementing retaliatory measures against the United States.
The outcome of this situation will most likely determine how the US stock market will perform. Thus far, only Chinese stocks had been heavily under pressure, losing around 20% in 2018. A full-scale trade war will hurt the already-fragile global economic recovery and dampen the prospects of future growth.
