🍨 Daily Scoop: Future of Oil | Trade Stocks

Future of Oil

By Wed, Apr 28, 2021

Hey Scoopers,

The markets turn attention to major tech companies’ earnings results and the Fed’s decision coming on Wednesday. — More on that in the “Overall Market” section.

Beyond the overall market, a parcel delivery service company outpaced all Wall Street’s estimates for its first quarter. Meanwhile, an EV maker did not deliver the results the markets were expecting. — More on that in the “What’s Up?” and “What’s Down?” sections.

By the way, do you think it is time for oil companies to start a transition to green energy? — More on that in the “Water Cooler” section.

But, first, here is a recap of what happened in the market yesterday:

Market Recap

  • U.S. markets: The stock market ended mixed on Tuesday. Scroll down to the “Overall Market” section to read more.
  • Cryptocurrency: Bitcoin‘s price climbed back to the $55K per coin mark.

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Waiting for Reports

The stock market ended primarily in the red zone on Tuesday.

Although both the S&P 500 index and the Nasdaq index traded higher on opening, both indices ended the day with negative results on Tuesday. After the steady session, investors are anxious to learn about major tech companies releasing earnings results on Wednesday. Along with the earnings results, the markets also expect favorable news about the Federal Reserve’s decision over its monetary policy.


Delivering Earnings

So, what happened?

Shares of United Parcel Service (Ticker: UPS) were up by more than 10% on Tuesday. The rally came after the company’s first-quarter result blew all Wall Street’s estimates. Although the market expected a $20.5 billion first-quarter revenue, UPS outpaced the expectations and posted a $22.9 billion revenue. Along with the better-than-expected revenue, UPS also reported a first-quarter $2.77 earnings per share against the expected $1.72. The markets believe that the increase in e-commerce sales amid a pandemic played a significant role for UPS to set the record financial result.


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Losing Charge

So what happened?

Shares of Tesla (Ticker: TSLA) were down by more than 4% on Tuesday. Although the EV maker posted good results for the 2021 first quarter, the numbers were not enough to excite its investors. Despite Tesla reporting a $10.4 billion first-quarter revenue, JPMorgan’s (Ticker: JPM) analyst Ryan Brinkman stated that the earnings before interest and taxes were worse-than-expected. Furthermore, another analyst reaffirmed a $700 price target for Tesla’s stock is based on the underperforming results. After the decrease in value, it seems that investors stayed by the analysts’ side as they reviewed Tesla’s earnings report.


Oil Proxy War

So what happened?

ExxonMobil (Ticker: XON) is getting publicly criticized for no compromise with environmental changes.

As regulators create bills and more incentives for green energy alternatives worldwide, companies have adapted their business model to fit the renewable energy future. And according to Engine No 1, ExxonMobil is not one of these companies. Unlike Shell (Ticker: RYDAF) and other major oil companies, Exxon still believes that oil and gas would play a vital role in the future. Engine No 1 is an activist investment firm and a significant Exxon stakeholder. The investment group stated that Exxon faces existential business risks as the company keeps tying its future to fossil fuel.

Acknowledging the criticism, ExxonMobil issued a letter to shareholders stating they should not trust “a months’ old hedge fund.” Moreover, the company said it would keep investing in its low-carbon projects as part of its 2025 greenhouse emissions reduction plan.

Although the war to define Exxon’s future seems to be far from over, it looks like major investors are raising concerns about the company’s plans for the future.

If you have any questions, or suggestions let us know by emailing us at members@tradestocks.com. We look forward to hearing from you.

About the Author

Felipe Nebesnyj is an Economics student who is passionate about the stock market and investing in the market. Originally from Brazil, he is working and studying in the U.S. and started learning about and researching the stock market at 16. Before joining Stock Card, Felipe worked on multiple stock market research projects that gave him the necessary knowledge and confidence to put into his stock market analyst career at Stock Card. Last but not least, he is an excellent violinist and enjoys video games.