Big Tech Earnings Under Radar This Week for S&P 500 Investors
30 Gennaio 2023 - 12:25PM
Finscreener.org
Investors should expect the stock
market to remain volatile in the upcoming week, given the plethora
of big-tech earnings on the cards. Some of the largest companies in
the world, including Apple (NASDAQ: AAPL), Alphabet (NASDAQ: GOOG), Amazon (NASDAQ:
AMZN),
ExxonMobil (NYSE:
XOM),
Starbucks (NASDAQ:
SBUX),
and Ford
(NYSE:
F), are expected to report earnings for the quarter
ending in December 2022.
Last week, tech giants such
as Microsoft (NASDAQ:
MSFT) and Intel (NASDAQ:
INTC) reported quarterly results, which underwhelmed
investors. While Microsoft reported its slowest revenue growth in
the last six years, Intel missed revenue and earnings forecasts by
a wide margin.
However,
Tesla (NASDAQ: TSLA)
surprised Wall Street forecasts, and the stock has already surged
by 46% in the past month. Tesla stated while lower automobile
prices drove profit margins lower, demand for its portfolio of
battery-powered vehicles gained significant momentum.
During the earnings call, CEO
Elon Musk confirmed, “Thus far in January we’ve seen the strongest
orders year-to-date than ever in our history. We’re currently
seeing orders of almost twice the rate of production.”
Analysts expect a tough
macroeconomic environment to negatively impact big tech earnings in
Q4 as companies continue to wrestle with tepid sales and rising
interest rates. In the last year, interest rate hikes have driven
valuations of tech companies lower, who increased balance sheet
debt to finance their expansion plans aggressively in the past
decade. Investors are worried that the rising cost of debt to hurt
the profit margins of companies across sectors in the next 12
months.
The adjusted earnings per share
for Meta Platforms (NASDAQ:
META) are forecast to
fall by 38% year over year to $2.25 on the back of lower ad sales
and losses attributed to the metaverse business. Comparatively,
Amazon’s earnings might nosedive by 83% year over year to $0.21
despite a 6% growth in revenue, while Wall Street forecasts
AlphabetU+02019s earnings to fall by 13.4% in Q4.
The jobs market remains in the spotlight
One macro indicator which will be
closely watched is the U.S. Labor Department’s JOLTS (Job Openings
and Labor Turnover Survey) report for the month of December. The
JOLTS report will be published on Wednesday, and its tracks job
openings, hires, resignations, and separations for the last month.
Payroll provider ADP will also publish its NEP or National
Employment Report, which tracks private-sector payroll growth for
January.
Next, the stage is set for the
nonfarm payrolls report, which will be published by the Labor
Department on Friday. Economists forecast the U.S. economy to add
185,000 jobs in January, lower than the 223,000 additions in
December. It will also mark the slowest growth since the loss of
306,000 jobs back in December 2020. The unemployment rate might
rise to 3.6% compared to a multi-decade of 3.5% right
now.
Central banks and policy meetings
The policymakers at the Federal
Reserve will conduct a two-day meeting of the FOMC (Federal Open
Market Committee) while deciding on the decision of interest rate
hikes this Wednesday.
Market participants expect the
Fed to raise interest rates by 25 basis points, increasing
benchmark rates to 4.5%-4.75%.
An Investopedia report states,
“The
European Central Bank (ECB) and the Bank of England (BoE) will hold policy meetings on Thursday. ECB
policymakers are expected to raise interest rates by 50 bps in
their ongoing effort to tame record-high inflation in the
eurozone, which hit a recent peak of 10.6% in October.
BoE officials are also expected to hike rates by 50 bps, as the
U.K. grapples with an economic slowdown and the highest inflation
rate in over 40 years.”
Grafico Azioni Exxon Mobil (NYSE:XOM)
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Grafico Azioni Exxon Mobil (NYSE:XOM)
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