Stock investors are anxious to see the latest mega cap tech earnings set for release over the next three days. Microsoft and Google parent Alphabet report after the close today, followed by Facebook parent Meta Platforms tomorrow (Wednesday), and Amazon on Thursday.
Earnings
Apple reports next week. The decline in demand for tech products has been well broadcast, which of course followed massive pandemic-fueled growth. Many companies have admitted that they positioned their businesses to continue growing at that same rapid fire pace, which led to overstaffing and excess spending. As demand for tech products and services has plunged, tech companies have been heavily trimming both workers and costs but many analysts still think the sector will struggle to show earnings growth for Q1. However, with expectations low, forward guidance will likely play a stronger roll in shaping investor sentiment.
One thing that could generate some new excitement for the tech sector is “artificial intelligence”, or AI, with all four tech giants reporting this week )Alphabet, Amazon, Meta, and Microsoft) having some degree of their businesses now dedicated to the technology. At the same time, some Wall Street insiders are worried about the huge expense of developing AI technologies and how that might be impacting cash flow, especially with most anticipating a US recession later this year.
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Data to watch
Other earnings highlights today include 3M, ADM, Biogen, Chipotle, Danaher, Dow, General Electric, General Motors, McDonald’s, PepsiCo, Raytheon, Spotify, UPS, Verizon, and Visa. Keep in mind, even if earnings overall deliver good news this week, any rallies could be limited ahead of the Federal Reserve’s policy meeting next Tuesday-Wednesday (May 2-3).
Investors mostly expect a 25 basis-point interest rate increase but the bigger question is whether the Fed will signal a pause in rate hikes going forward. Bulls believe that once that major uncertainty is removed, it could clear the way for another run higher. Bears however warn that any rallies could be interrupted by the debt ceiling fight in Washington with the deadline to a US “debt default” grows closer. It’s not clear yet what that exact date might be but insiders think it could be as early as June. Turning to economic data, investors today will be digesting the Case-Shiller Home Price Index, New Home Sales, Consumer Confidence, and the Richmond Fed Manufacturing Index.
SP500 Is Flat Ahead Of Mega Tech Earnings
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