28.10.2022 Key Oil Company And PCE Prices Index To Set a Tone Today

Stock investors get no break from the data and earnings deluge with key oil company results and the closely watched PCE Prices Index due out today.

Earnings

Wall Street is again digesting somewhat disappointing big tech earnings, this time from Amazon and Apple. While Amazon’s Q3 earnings and sales were in line with Wall Street expectations, the company disappointed with less-than-expected growth in its Amazon Web Services cloud business.

Maybe more importantly, Amazon’s projected sales growth for Q4 came in far below analyst expectations. Apple’s Q3 earnings and revenue results topped analyst estimates but Wall Street is worried about slower growth in its business services category as well as iPhone sales, both of which missed estimates.

It’s worth noting that Apple CEO Time Cook said supply issues had no significant impact on the company’s Q3 results, a turnaround from recent quarters and a welcome sign that supply chain headwinds are mostly in the rearview.

Analysts that are bearish on the tech sector believe growth will continue to deteriorate, however, because a lot of demand for big tech products and services was pulled forward by the pandemic. Meaning the loss of pandemic-fueled demand and stimulus dollars will now leave a “demand vacuum” that could weigh on the sector in the quarters ahead.

Today, big oil giants Exxon and Chevron are expected to post outstanding Q3 results, though weaker than Q2 due to the retreat in oil prices. Still, both companies are expected to deliver their second-highest profits ever, behind only Q2 2022.

There is some concern on Wall Street that big profits might attract unwelcome attention, however. The UK has slapped windfall taxes on energy companies and the EU is working on a similar plan, which has raised fears the US might follow suit.

AbbVie, Colgate Palmolive, Mobil, and NextEra Energy also report results today. On the data front, investors have all eyes on the PCE Prices Index due out this morning and expected to show year-over-year gains for both headline and “core” inflation (strips out food and energy).

Data to watch 

Wall Street is looking for a headline PCE Prices read of +6.3%, and a “core” rate of +5.2%. If the numbers come in lower than expected, that will obviously boost the bulls’ belief that the Federal Reserve is preparing to ease up on its rate hikes.

At its two-day meeting next week on November 1-2, the Fed is widely expected to lift its benchmark rate by +75-basis points. The big debate is what the Fed will do in December and bulls have high hopes that officials will signal a less aggressive hike of perhaps 50-basis points.

The European Central Bank delivered its second straight 75 basis point interest rate hike yesterday. However, many are interpreting ECB President Christine Lagarde’s follow-up comments as “dovish” because she put a lot of stress on the importance of upcoming data which many expect will show the EU economy is in or near recession. Next week, the economic data highlight will be the October Employment Situation on Friday.

Inflation reads from ISM Manufacturing on Tuesday and ISM Non-Manufacturing on Thursday will also be in the spotlight. Q3 earnings continue next week with a wide range of sectors represented. Key results include Aflac, NXP Semiconductors, and Stryker on Monday; Advanced Micro Devices, Airbnb, BP, Eli Lilly, Pfizer, Phillips 66, and Uber on Tuesday; Allstate, CVS, Humana, Novo Nordisk, Nutrien, Qualcomm, Trane, and Yum Brands on Wednesday; Amgen, Cigna, ConocoPhillips, Corteva, Moderna, Monster Beverage, Nintendo, PayPal, Starbucks, and Zoetis on Thursday; and Berkshire Hathaway, Dominion Energy, Duke Energy, and Hershey on Friday.

Key Oil Company And PCE Prices Index To Set a Tone Today

Wishing you a great week!