• US equities closed lower on Monday 
  • Alphabet posted its results after the closing bell
  • Upcoming week will be crucial for the current earnings season

US equities closed mostly lower Monday as Wall Street geared up for a major week of earnings and Federal Reserve news.

The Dow Jones industrial average fell 66.90 points to close at 21,513.17. Johnson & Johnson contributed the most losses on the 30-stock index. The S&P 500 closed 0.11 percent lower at 2,469.91 with utilities and telecommunications leading decliners. The Nasdaq composite outperformed, closing 0.36 percent higher at 6,410.81, and notching intraday and closing records. The tech-heavy index is up nearly 20 percent year to date.

This week, approximately 180 S&P 500 components are scheduled to report, including tech giants Facebook and Amazon. Google-parent Alphabet posted better-than-expected quarterly results after the bell, but shares fell as much as 3% in after hours trading as the company reported worse-than-expected performance on two key metrics: cost per click and traffic acquisition costs, or TAC.

Here are the numbers:

  • EPS: $5.01 versus $4.49 expected
  • Revenue: $26.01 billion, up from $21.5 billion a year ago
  • Paid clicks: +52% from a year ago
  • Cost per click: (23%) from a year ago

The drop in cost per click (the amount advertisers are paying each time a user clicks on an ad served by Google) was much higher than the 15% analysts expected, due to more search traffic coming from mobile devices. Traffic acquisition costs amounted to $5.09 billion, higher than analyst estimates of $4.75 billion Alphabet CFO Ruth Porat said on a conference call with analysts that the shift to mobile search traffic and automated purchases made by ad clients – better known as programmatic advertising – both carry higher costs.

As for the SP500, the index remains within an upward trend (US500 on xStation5) and more gains should be expected as it has broken above an important resistance at 2450. The crucial support lies at 2400, with a minor at a previously broken resistance. A re-test of the latter could be an interesting opportunity to join the bullish trend.

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 The SP500 remains in an upward trend. It has broken above an important resistance at 2450.


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