Earnings season is the heartbeat of the market, and every day brings fresh signals about where money is flowing.
With each report, we learn not just how companies are performing, but how investors are reacting.
In the Daily Beat, we spotlight the most important S&P 500 earnings moves from the prior session: the winners, the losers, and the reactions that reveal what really matters to the market right now.
Whether itβs a bellwether with broad economic implications or a niche name making waves, we cut through the noise to focus on the setups that matter most.
Here are the top beats from the S&P 500 π
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At the top of Thursday's list was the $25B airline stock, Southwest Airlines $LUV. Following a mixed earnings report, shareholders were rewarded with a +6.77 reaction score.
In the report, LUV posted revenues of $7.44B, missing the expected $7.50B, and earnings per share were $0.58, above the expected $0.57.
Another notable beat came from the $94B travel services stock, Royal Caribbean Cruises $RCL. After posting mixed headline results, the stock had its best earnings reaction since the Great Financial Crisis.
Here are the bottom beats from the S&P 500 π
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At the bottom of Thursday's list was the world's largest software stock, Microsoft $MSFT. After beating headline expectations across the board, shareholders suffered a -7.88 reaction score.
MSFT reported revenues of $81.27B, above the expected $80.31B, and earnings per share of $4.14, beating the expected $3.91.
The beat/beat/drop from Tesla $TSLA also stood out to us.
Let's talk about what else happened π
LUV had its best earnings reaction of the 21st centuryπ₯
Southwest Airlines had a +18.7% post-earnings reaction, and here's what happened:
Revenues reached an all-time high, and outperformed their $370M cost reduction target.
The company implemented major business model changes: bag fees, basic economy, assigned seating, extra legroom, and Rapid Rewards optimization. These changes will give them more upsell opportunities.
In addition to the blockbuster earnings report, the management team expects to earn $4 per share in earnings during 2026. This is more than a threefold increase from 2025.
Everything about this report was fantastic, but the market's reaction was even better.
Not only is the price decisively resolving a prolonged bearish-to-bullish reversal pattern, but it's doing so on the heels of the best earnings reaction of the 21st century.
In other words, there's no debating that the technicals and fundamentals are aligned in strong primary uptrends.
Based on this, we expect LUV to outperform its peers for the foreseeable future.
MSFT had its worst earnings reaction since 2013π»
Microsoft had a -10% post-earnings reaction, and here's what happened:
The top-line increased 17% year-over-year, led by Intelligent Cloud and Productivity and Business Processes.
Even more impressive, earnings per share surged 60% year-over-year as the company increased margins.
While the management team issued solid revenue guidance, the market was disappointed by the Microsoft Cloud guidance. They expect a significant decline in profitability due to AI investments.
This was a pretty solid report, yet the market reacted worse than we've seen in more than a decade.
Making matters worse, the technicals are confirming this bearish shift in earnings sentiment. The stock has decisively resolved a prolonged distribution pattern and is in a brand-new primary downtrend.
Until something significantly changes with MSFT, the path of least resistance is lower for the foreseeable future.
Happy Friday!
-The Beat Team
P.S. Earnings season creates opportunity, but only if you know how to trade the events.
Instead of guessing direction, Steve Strazza focuses on how the market responds to earnings to identify high-probability breakout setups.
Watch the replay to see how fundamentals, technicals, and sentiment come together to turn earnings volatility into actionable trades.
