Apple (AAPL) and Palantir (PLTR) shares fell 3% each. This happened on the morning of November 3, at 08:02 MSK. Both securities have the same reason - the released earnings reports.
Earnings report is the publication of a company's quarterly results. The market compares the figures with expectations and immediately revalues the stock up or down.
Why this matters to a trader. AAPL and PLTR are among the heavyweights of the American market and drag the S&P 500 and Nasdaq along with them.
What exactly happened?
The movement is identical in magnitude for two very different securities.
- AAPL -3% - reaction to Apple's report
- PLTR -3% - reaction to Palantir's report
Specific revenue and profit figures were not provided in the summary. Therefore, one thing is certain: the market perceived the releases negatively and revalued both securities down by 3%.
Why is such a morning dangerous?
Timing of the movement. Such drops occur outside the main trading session. Liquidity there is thin, and spreads are wider than usual.
- A position opened before the release. The price may move past the stop.
- An order is executed after the gap. Not at the specified level, but where the market has already jumped to.
The main point: three percent on a heavyweight amid thin liquidity is execution risk, not just directional risk.
What's next?
The opening of the American session. That is where it will become clear whether these 3% will be bought back or the movement will continue.
Reports from major companies continue to come out all week, so volatility persists across the indices. It is convenient to keep the dates of releases and events in front of your eyes in the economic calendar.
Did you see these minus 3% before the market opened?
Holding a heavyweight through an earnings report is always a lottery on thin liquidity. The morning 3% on two securities is proof of that. Such a reaction can be traded, but everything is decided by the nominal: three percent on an index in an account of one and a half thousand dollars feels like small change. Prop trading is built precisely for this gap: the company provides access to its trading account, the trader passes a paid evaluation and takes a share of the profit. The week of reports has only just begun - it makes sense to understand the mechanics before the next such morning.