Earnings: numbers vs. words
- MMC has bounced since last week’s earnings sell-off
- Call options volume high Monday—but so was put volume
- Similar moves sometimes followed by more volatility
With earnings season ramping up, it’s a good time for a reminder about one of the key dynamics of earnings announcements: Sometimes the numbers matter much less than the outlook.
Marsh & McLennan (MMC) is a case in point. The insurance broker and consulting company topped its headline earnings and revenue numbers last Thursday but issued forward guidance that came up short of expectations. The result was an 8.5% decline that dropped the stock, which had already fallen more than 16% from its early-April high, to its lowest level in nearly two years:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
Morgan Stanley & Co., which currently has an Equal Weight rating on MMC, notes "slower economic growth could weigh on brokerage organic growth, whereas consulting businesses are more exposed to negative impacts from slowdowns.”1
The stock has, however, bounced the past two days, and some bulls may have been encouraged to see call volume was running around 20 times average on Monday—at least if they ignored the fact that put volume was a little more than 18 times average.
While last Thursday’s sell-off was fairly modest in the context of earnings season, it was fairly significant for MMC. The stock has fallen 5% or more while also hitting its lowest low in at least a month only 20 other times since 2005, and four of those moves occurred during the March 2020 COVID sell-off.
But this small slice of history suggests MMC could experience additional volatility, even if its longer-term path is to the upside. So far, the stock has followed its “typical” path after this type of move, climbing the first two days after the sell-off day. But more often than not (56% of the time), the stock was lower both five and 10 trading days after the down day.2
Earnings announcements are rarely as straightforward in reality as they are in theory. When news breaks about a company’s “earnings beat,” it doesn’t necessarily translate into upside for the share price. Also, initial earnings moves, up or down, don’t always stick. It can take a while for the market to strike a balance between what a company has done vs. what it thinks it may do in the future.
Market Mover Update: December gold futures (GCZ5) bounced back from Friday’s sell-off, rallying more than 3% on Monday and closing at a new record high of $4,359.40.
Today’s earnings include: General Electric (GE), General Motors (GM), Halliburton (HAL), Coca Cola (KO), Lockheed Martin (LMT), Mattel (MAT), 3M (MMM), Netflix (NFLX), Northrop Grumman (NOC), Spirit Aerosystems (SPR), Texas Instruments (TXN).
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1 MorganStanley.com. First Take 3Q25 Earnings: Slower Growth to Continue. 10/16/25.
2 All figures represent Marsh & McLennan (MMC) daily closing prices, October 2005-October 2025. Supporting document available upon request.