On mid-Tuesday, Dow almost flat and recovered from Google/Alphabet plunge on U.S. bipartisan deal of $2T infra capex. Earlier, Dow slumped almost -135 points on a terrible report card from Google parent Alphabet (NASDAQ:) (revenue miss), subdued global cues after muted manufacturing PMI from China (although the bad news is now good news for China as it could open the gate for more stimulus) and ongoing suspense about the US-China trade talks. But pharma majors Merck, Pfizer (NYSE:) is helping on earnings beat, while GE is also upbeat on the mixed report card (earnings beat, while cash-flow disappoints). But the market is also getting the support of lower USD amid upbeat economic data from the Eurozone, hopes of 2nd Brexit referendum and month-end rebalancing.
Energies helped on Buffet interest and higher oil amid renewed geopolitical tensions in Venezuela and Saudi pledge to extend OPEC+ production cut agreement to Dec’2019 (year-end).
Alphabet dragged the communication sector as its Q1 revenue missed estimate; sparking concern advertisers are shifting some spending from Google to other digital rivals. Alphabet reported net revenue at $29.5B, UP 19% (y/y) against expectations of $30.04B, while EPS was at $11.90 vs estimate of 10.60. The EPS figures included/adjusted the impact of a $1.7B fine imposed by the EU. The net profit in the first quarter was $6.66 billion, which included the EU fine for Alphabet’s alleged antitrust practices and abusing its dominant position in online advertising to hurt competitors.
Alphabet’s CFO, Ruth said: “We delivered robust growth led by mobile search, YouTube, and Cloud with Alphabet revenues of $36.3 billion, up 17% vs. last year, or 19% on a constant currency basis. We remain focused on, and excited by, the significant growth opportunities across our businesses”.
Ruth also suggested recent ad product changes were affecting Alphabet’s top-line growth,