Relief Rally Post-Midterms, Plus Earnings: HUM, KORS & More

Wednesday, November 7, 2018

Market indexes are back in the green this morning, following a tight battle between Republicans and Democrats for control of Capitol Hill. In the end (and although we still don’t have results from a few areas around the country), the rival parties split, with Democrats taking control of the House of Representatives for the first time in 8 years, while Republicans managed to increase their majority slightly in the upper-chamber Senate.

As we had pointed out here yesterday, midterm elections always — going back to World War II — result in a market upswing. Regardless the makeup of majority party, simply ending the uncertainty that overwhelms market participants helps the indexes gain traction. And not just in the very near term, either — statistics show the third year of a four-year presidential term is usually the strongest for the stock market.

That said, this is anything but a usual federal government going into 2019: not only President Trump and his decidedly non-politician approach to his office, but the new Congress, especially in the House, brings with it more women and minorities than at any time in the country’s history. On the one hand, this better represents the melting pot of U.S. citizenry; on the other, no one is quite sure the direction the Legislative branch of our government is likely to take.

Thus, noting trends regarding how election cycles affect investment are very important, but so is the willingness to toss out old trends in favor of new directions where they apply. For more on this, check out Zacks Executive Vice President Kevin Matras’ take in this morning’s Profit from the Pros column: After Some Post-Election Price Action, Market To Refocus On Economy And Earnings

We also have plenty of Q3 earnings reports to mull over. Tonight beings us some key results from companies like Qualcomm (NASDAQ:QCOM) , Wynn Resorts (NASDAQ:WYNN) and Marathon Oil (NYSE:MRO) . Here are some quick takes on quarterly releases this morning:

Zacks Rank #2 (Buy)-rated Humana (NYSE:HUM) easily outperformed expectations on both top and bottom lines ahead of the opening bell today, with $4.58 per share on $14.2 billion topping the Zacks consenses $4.29 and $13.9 billion, respectively. This amounts to a 6.8% positive earnings surprise and year-over-year growth of 35%. The health insurance major brought in 7% gains in its Medicare Advantage Business Plus segment. For more on HUM’s earnings, click here.

Clothing and accessories retailer Michael Kors (NYSE:KORS) , however, posted mixed results for its fiscal Q2 earnings report, beating the Zacks consensus on the bottom line to $1.27 per share (though down 7 cents per share from the year-ago quarter) on $1.25 billion in sales which came in a hair light of analyst expectations. The stock, in early morning trading, has fallen a precipitous 15% upon earnings results, taking the stock down to 52-week lows. For more on KORS’ earnings, click here.

21st Century Fox (NASDAQ:FOXA) , the entertainment media major about to operate as a segment of The Walt Disney Company (NYSE:DIS) after a blockbuster acquisition this past summer, missed earnings estimates by a penny to 52 cents per share, on revenues of $7.18 billion that fell 1% short of the Zacks consensus. Pre-market trading is up slightly on the earnings release. For more on FOXA’s earnings, click here.

Mark Vickery
Senior Editor

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