The earnings docket is in focus amid a slew of megacap reports, with a handful of Dow components stepping into the confessional as well. Caterpillar Inc (NYSE:CAT) and Microsoft Corp (NASDAQ:MSFT) are among them, and as both securities tumble after reporting results, now looks like a good time to check in.

Microsoft Stock's Worst Day Since October

MSFT is down 6% to trade at $416.03 at last glance, pacing for its fourth daily loss in five and worst day since October, but a floor at $410 looks ready to contain this pullback. The tech giant beat top- and bottom-line estimates during its fiscal second quarter, but it also issued a dismal cloud growth outlook and defended increased spending on artificial intelligence (AI) despite DeepSeek pressure. 

The equity attracted six price-target cuts in response, the worst from BMO to $500 from $510. The biggest loser on the Dow today, MSFT is also the second most-traded stock in the options pits with triple the intraday average volume. Most popular by far is the weekly 1/31 420-strike call, where positions are being opened.

Caterpillar's Lackluster Sales Forecast

CAT is also struggling, last seen down 4.3% at $376.12, brushing off a fourth-quarter profit beat after the heavy equipment name also reported a revenue miss and cut its 2025 sales forecast. Caterpillar stock failed to conquer the $410 region in the previous session, which also enacted pressure in November. Despite eyeing its worst single-day percentage drop since September, CAT still sports a 25.5% year-over-year lead.

Over at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CAT's 50-day call/put volume ratio of 1.54 sits higher than all other annual readings. This indicates options traders have favored calls over the last 10 weeks.

As January winds down, Wall Street is set to notch its first monthly win of 2025, carrying strong momentum into February. However, not all stocks are poised to benefit from the bullish sentiment.

Schaeffer’s Senior Quantitative Analyst Rocky White has identified the 25 worst-performing S&P 500 Index (SPX) stocks in February over the past decade -- one of which is Take-Two Interactive Software, Inc (NASDAQ:TTWO). According to White’s research, TTWO has averaged a 6.7% loss in February over the past 10 years, managing a monthly gain only twice during that period. From its current perch, a drop of this magnitude would put the equity below $180.

Despite this historical weakness, Take-Two Interactive stock has had a solid start to 2025, up 4% year-to-date. The video game giant was last seen 0.8% higher at $191.56, after earlier touching $192.50 -- its highest level since November 2021.

However, an unwinding of optimism in the options market could present headwinds. TTWO’s 50-day call/put volume ratio of 5.11 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 88th percentile of the past year. If traders begin to unwind this bullish sentiment, Take-Two Interactive stock could face additional downside pressure.

United Parcel Service Inc (NYSE:UPS) -- which is on Schaeffer's Senior Quantitative Analyst Rocky White's list of the worst stocks to own in January -- is plummeting today, down 15.4% at $113.16 at last glance. The stock is brushing off a fourth-quarter earnings beat after its revenue missed estimates and a downbeat full-year forecast. UPS also announced an agreement with Amazon.com (AMZN) to cut back its deliveries, catching several analysts by surprise. 

Today's bear gap has UPS falling to more than four-year lows and its largest single-day percentage drop in history. The equity is on the short sell restricted (SSR) list amid the volatility, and sports a 30% year-over-year deficit. 

Over in the options pits, 52,000 calls and 38,000 puts have been exchanged so far today, representing 10 times UPS' average daily options volume. The soon-to-expire, weekly 1/31 110-strike put is the most popular, where new positions are being bought to open. 

Over the last 10 weeks, however, calls have been much more popular than usual. This is per UPS' 50-day call/put volume ratio of 2.88 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks higher than 90% of readings from the past year. 

Big Tech is hitting the earnings confessional hard, with reports from Meta Platforms (META) and Microsoft (MSFT) to unpack. Both IBM (NYSE:IBM) and Wolfspeed Inc (NYSE:WOLF) just announced their own quarterly results as well.

IBM handily beat fourth-quarter earnings estimates, as customers rushed to invest in cloud infrastructure that supports artificial intelligence (AI) technology. The stock also attracted no fewer than nine price-target hikes, including one from BMO to $280 from $260. Shares are up 12.6% to trade at a record high $257.44 at last check, eyeing their best day ever while sporting a 52.6% nine-month lead.

Wolfspeed announced a smaller-than-expected loss for the fiscal second quarter and beat revenue expectations, citing "significant progress" on its new operating plan. Nevertheless, analysts chimed in with four price-target cuts, including one from Mizuho to $5 from $7.50. Last seen down 0.6% at $5.97, WOLF has struggled with overhead pressure at its 40-day moving average since November, and carries an 81.8% year-over-year deficit. 

Both equities are attracting options volume today. IBM has seen 14 times the options volume typically seen at this point, while WOLF has seen double. For the former, the most active contract is the February 230 call, while for the latter it's the weekly 1/31 5-strike put.

Meta Platforms Inc. (NASDAQ:META) stock is up 2.5% in premarket trading after the social media giant exceeded earnings and revenue expectations. The company reported fourth-quarter earnings of $8.02 per share on $48.39 billion in revenue, surpassing consensus estimates of $6.77 per share and $47.04 billion, according to LSEG.

Meanwhile, The Wall Street Journal reported President Donald Trump signed a settlement agreement requiring Meta to pay around $25 million to resolve a 2021 lawsuit he filed after the platform suspended his accounts on the heels of the Jan. 6 U.S. Capitol attack. Of that amount, $22 million will fund Trump’s presidential library, while the remainder will cover legal fees and other plaintiffs. Meta will not admit wrongdoing as part of the settlement.

Heading into today, META had already climbed 15.5% in 2025 and was up 69.1% year over year. If premarket gains hold, the stock will open at $693.70, surpassing its Jan. 28, all-time high of $674.33. This would also mark its ninth-straight daily win, putting it on track for a third consecutive monthly gain.

Following the updates, no less than 20 analysts hiked their price targets on Meta Platforms stock. BMO took it a step further, upgrading the security to "buy" from "hold."

Big Tech sold off on Monday after reports that Chinese startup DeepSeek created an artificial intelligence (AI) model that outperformed OpenAI's at a substantially lower cost. Now, Alibaba Group Holding Ltd (NYSE:BABA) is joining the race, claiming its own AI model Qwen 2.5 surpassed DeepSeek-V3.

Options traders are blasting the security in response, with 740,000 calls and 150,000 puts exchanged so far -- five times the overall volume typically seen at this point. Most popular is the weekly 1/31 100-strike call, where new positions are being opened.

Options bulls were targeting the stock before today, too. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), BABA's 50-day call/put volume ratio of 8.66 ranks in the 99th annual percentile. This suggests that calls have been much more popular than usual of late.

BABA was last seen up 2.2% at $98.10 at last glance -- its highest level since October. The security is on track for its seventh win in the last eight days and fourth-straight pop, after yesterday securing its best daily percentage gain since Dec. 9. Plus, BABA sports a 36.2% year-over-year lead.

Despite the choppy start to the year, fourth-quarter earnings season has been encouraging for investors and companies alike. A Wall Street Journal report indicates the average S&P 500 Index (SPX) stock has swung by around 5.5% after reporting results—well above the roughly 3.9% move up or down anticipated by derivatives traders. The upbeat reports are a beacon of stability amid a very anxious time for Wall Street.

Over 90% of S&P 500 companies are scheduled to report earnings after President Trump's inauguration. Of the top 10 companies in the U.S. by market cap, not a single one has stepped up to the earnings plate yet. Those two statistics, together, should be encouraging for investors. But as Fed fatigue and Trump tariffs linger as obstacles that could cloud future earnings seasons, this could be the last opportunity for investors to take advantage of certainty-laden outlooks and the outsized gains they bring.

To prep for the week(s) ahead, there are some earnings trends from the last week worth highlighting. Airliners showed that Wall Street rarely forgives guidance missteps. American Airlines (AAL) reported a top-line beat for the current quarter, but 2025 guidance was well below forecasts, prompting the stock to gap lower 8.7% on Thursday. The only of the ‘Big 3’ airliners unable to top its guidance estimates, and investors let it be known.

Earlier this week, we profiled Texas Instruments (TXN) as the first major chipmaker to step into the earnings confessional for 2025. TXN had a brutal post-earnings history and weak industrial demand were already bubbling ahead of Friday morning. Right on cue, TXN dropped 6.3%, with a softer-than-anticipated first-quarter forecast overshadowing an earnings and revenue beat. Analysts piled on with five price-target cuts, the worst coming from Morgan Stanley to $165 from $167.

Another trend forming is that bloat is out, and spinoffs can have a positive effect on companies. A nimbler GE Aerospace (GE) hit an earnings triple play, prompting no fewer than six price-target hikes, the highest coming from Deutsche Bank to $261 from $228. GE gapped up 6.6% and is now 20% higher year-to-date already. Energy spinoff GE Vernova (GEV) brushed off a fourth-quarter revenue miss and affirmed its 2025 outlook, helping GEV pop 2.7% on Jan. 22 and nab a record high. As an aside, this means bookmark Chemical giant DuPont’s (DD) massive split in the next 24 months and watch what happens.

The most important takeaway from the week’s earnings is that all it takes is one report to shift the paradigm. Look no further than Netflix’s (NFLX) “near flawless” fourth-quarter report that saw the stock gap higher by 9.7% in response. Wall Street’s reaction was rabid; the stock received at least 10 price-target hikes and three upgrades, the loftiest coming from Rosenblatt Securities to $1,495 from $680. The report was so stellar it gave a halo lift to streaming peers Roku (ROKU) and Walt Disney (DIS), the former of which landed a bull note off of Netflix’s report.

Historic performance plays a part in identifying the stocks prone to big post-earnings moves. Earlier this month, we profiled Netflix’s earnings history: the stock had finished four out of eight next-day sessions higher over the past two years. And for Wednesday’s trading, options traders were pricing in a 9.4% move for NFLX, regardless of direction, slightly more than the 8.6% average post-earnings swing over the last eight reports.

With that in mind, who are the candidates to pull a Netflix next week? Apple (AAPL), Microsoft (MSFT), Meta Platforms (MSFT), and Tesla (TSLA) make up 10 trillion market cap alone. All four step into the earnings confessional next week. The table below examines the stock’s post-earnings reactions. Note the table below the volatility and penchant for big moves from META and TSLA, though the options market is pricing in a smaller-than-usual move from both equities for next Thursday’s trading. Microsoft is looking for redemption after a 5.9% drawdown last October, though the stock has filled that gap twice since.

Next week will also feature blue-chip, heavy-hitting reports from energy giants Exxon-Mobil (XOM) and Chevron (CVX), as well as fintech staples Visa (V) and MasterCard (MA). Those four market caps only add up to $1.8 trillion, while Meta’s market cap alone sits at $1.6 trillion. Blue chips tend to have a rather quiet history of post-earnings moves, as most non-tech Dow names do. So if you’re looking for a Netflix-type reaction that sends shockwaves through a sector, a few candidates come to mind.

Intel (INTC), IBM (IBM), and ASML Holding (ASML) all roughly fit the billing of the self-imposed criteria established above. Intel and IBM are a little lighter on their feet lately thanks to spinoffs, though the former’s is probably too fresh to be impacted by this upcoming report. Intel and IBM, two former tech institutions, shared encouraging guidance for 2025 back in the fall. And last month, ASML reaffirmed its own guidance even amid the new U.S. semiconductor export curb.

Highlighting post-earnings winners is arm-chair quarterbacking at its finest. Calling those same winners pre-event is a dart throw at best. Trying to time big earnings swings with options is not for the faint of heart, especially with implied volatility (IV) often spiking premiums to pricier-than-usual levels. Caution must be exercised around every turn. However, hopefully the above tables show that a little bit of historical context goes a long way in cutting through the noise.