Following the second week of earnings, 74% of companies have beaten on earnings per share, while 58% have beat on sales and 47% on both, Bank of America strategist Savita Subramanian pointed out in a note. Botton-up earnings per share rose to $40.74, up from $40.46 the week prior. The Staples sector has seen the fewest EPS and sales beats, with BofA analysts pointing to currency headwinds. Guidance so far has been slightly weaker, with the three-month ratio of above- versus below-consensus earnings guidance registering at 0.6, below the long-term average of 0.7.
“With only ~30 instances of guidance in Oct. so far, this week will be key, when companies across a broader range of sectors report,” Subramanian wrote. “Commentary on earnings calls has been mixed, but generally positive: mentions of ‘better’ or ‘stronger’ vs. ‘worse’ or ‘weaker’ is tracking slightly below-avg., but mentions of optimism are tracking above avg. and at a three-quarter high.”
News: Saudi Arabia reportedly won’t weaponize oil as controversy over death of US journalist heats up. Saudi Arabia does not have plans of imposing an oil embargo on Western consumers, the country’s energy minister reportedly told Russia’s TASS news agency. Saudi Arabia is the world’s largest oil exporter. Concerns of an embargo reminiscent of one Saudi Arabia unleashed in 1973 against countries supporting Israel during the Yom Kippur war arose amid continuing tensions between the US and Saudi Arabia over the fate of Washington Post journalist Jamal Khashoggi. Saudi Arabia admitted for the first time Friday that Khashoggi was killed, while Saudi Prince Mohammed bin Salman has continued to deny any involvement.
International backlash over Khashoggi’s disappearance has dented Saudi Arabia’s relationship with foreign investors, leading to a selloff of Saudi Arabian stocks. Foreigners were net sellers of 4 billion riyals, or $1.1 billion, or stocks last week, Bloomberg reported. Meanwhile, major corporate executives have continued to abandon Riyadh’s Future Investment Initiative conference set to begin Tuesday, including leaders from Uber, JPMorgan Chase, Google Cloud, BlackRock, Blackstone and Credit Suisse, among others.
STOCKS: Hasbro tumbles in wake of Toys “R” Us demise, Instagram edges past Snapchat as most-used teen social media platform. Hasbro’s (HAS) stock tumbled after the toy retailer posted weak earnings and announced it will lay off up to 10% of its employees after the fallout of Toys “R” Us, which had been the world’s largest independent toy retailer. Net revenue fell 12% in the third quarter to $1.57 billion, from $1.79 billion in the same period of 2017. Adjusting earnings came in at $1.93 per share, missing average analyst expectations of $2.24 per share, according to data compiled by Bloomberg. The company anticipates that that job cuts will save between $30 million and $40 million by 2020. Shares of Hasbro fell 6.78% to $91.40 as of 9:32 a.m. ET.
Facebook-owned (FB) Instagram has overtaken Snapchat (SNAP) as the most-used social media platform among young people, Piper Jaffray analyst Erinn E. Murphy wrote in a note Monday. According to a Piper Jaffray survey, 85% of teenagers use Instagram at least once per month, while 84% use Snapchat. Facebook’s main site use, however, has continued to decline, with only 28% of 15-year-olds using Facebook at least once per month, from about 40% in fall of 2016. Instagram has been viewed as Facebook’s biggest growth engine, and the photo-sharing platform is estimated to be worth $100 billion, if it were a standalone company. Snapchat’s stock rose 1.32% to $6.90 per share as of 9:31 a.m. ET, while Facebook’s stock gained 0.8% to $155.22 per share.