It's starting to look like investors only care about 2019. Let's recount how many earnings reports have been solid, not only on a top- and bottom-line basis but also in terms of guidance. Amazon.com Inc. ( AMZN - Get Report) beat earnings estimates on Thursday (although it missed revenue estimates), and issued higher guidance but the forecast came in below estimates. That's a beat and raise, and the stock was down more than 8% in premarket trading on Friday. Microsoft Corp. ( MSFT - Get Report) beat on both the top and bottom lines. Caterpillar Inc. ( CAT - Get Report) did the same and reiterated full-year guidance, and the stock fell following earnings onTuesday. Netflix Inc. ( NFLX - Get Report) reported stellar earnings Oct. 16. The stock hit $364 a share the next day, and is now at $312. Bank earnings were almost all solid as well.
The broader market, however, hasn't responded. The S&P 500's year-to-date gain is 1.2% but it's had a bruising October. It was up 9.42% for the year on Oct. 3. The Dow Jones Industrial Average has gained 1.07% year to date, after being up 8.53% for the year to Oct. 3. The Nasdaq has risen 6.01% year to date, after being up 16.25% to Oct. 3. USAA Head of Equities John Toohey called it right in September when he told me that Federal Reserve rate hikes, of which more are coming, and trade disputes would hurt stocks. Rate hikes are expected to quell demand, tariffs from the Trump administration are pinching margins, which Caterpillar warned of Tuesday, and above all else stock prices seem to be telling us that more investors think we're at or near the peak of the economic cycle than those who think there's more growth in the tank.
Colgate-Palmolive Co. ( CL - Get Report) was one of the few companies that posted earnings on Friday and quarterly sales missed estimates. Adjusted earnings of 72 cents a share matched analysts' forecasts. The culprit for the revenue miss was another factor both Toohey and Goldman Sachs warned about: a strengthening dollar. That hurt international sales at the consumer products company.
Looking ahead to next week, Starbucks Corp. ( SBUX - Get Report) reports earnings Nov. 1. The coffee chain will look to follow up its main competitor, Dunkin' Brands Group Inc. ( DNKN - Get Report) , which reported solid earnings Thursday. Nvidia Corp. ( NVDA - Get Report) is another stock to watch later in the month. It reports on Nov. 15.