The Big Tech earnings next week could revive a flagging market, or at least give investors direction into where stocks are going from here. Next week will spotlight the bulk of the Magnificent Seven names, which had a strong start to the year, but have been in a slump as of late. Tesla reports Tuesday, Meta Platforms is out Wednesday. Thursday serves a double whammy with Google-parent Alphabet and Microsoft . But those results are coming at a time when investors are on edge, uncertain where markets are heading after a pushback in rate cut expectations, a recent rise in geopolitical tensions in the Middle East, as well as a spike in Treasury yields. On Friday, the S & P 500 was more than 5% off its 52-week high; it also dipped below 5,000, a level the broader index had only reached for the first time ever in February. Wall Street is hoping next week’s megacap tech results will give investors insight into where the artificial intelligence trade is going from here, as a bounce in tech could lift the indexes. They’re also hoping a slew consumer commentary will give investors insight into the state of the economy. “Every week of earnings is the most pivotal one, but I really think this one is the most pivotal one,” said Kim Forrest, founder at Bokeh Capital, adding, “I think everybody is like me looking to next week thinking, ‘This will be the time where we can figure out the direction of the market.'” As of Friday afternoon, the S & P 500 and tech-heavy Nasdaq Composite were each on pace for a losing week. Further gains, or buying opportunity? As a whole, the bar is high for the Magnificent Seven, even as there are increasing divergences between the names. Tesla, for example, will be in the spotlight next week. Investors are hoping for some positive news out of electric vehicle maker, which is the second-worst performer in the S & P 500 this year as it contends with slowing sales and rising competition from China. This week, Deutsche Bank downgraded the stock to hold from buy following a Reuters report of the possible scrapping of a low-cost car. In response, CEO Elon Musk said Reuters was “lying.” Shares were down 14% this week. Investors a sense of how artificial intelligence will be monetized, seeking insight into growing Google’s cloud business , as well as Microsoft’s Copilot chatbot. “These will give us some of the best indications of AI demand,” said Emily Leveille, portfolio manager at Thornburg Investment Management, adding, “We expect earnings, I think, to be pretty good for at least for Microsoft and for Meta, just considering sort of recent momentum in earnings growth.” Horizon Investments’ Scott Ladner urged caution ahead of the reports given the high expectations swirling around the megacaps. However, he said any pullback in the tech names could give investors an opening to start “nibbling away” at additional exposure. While the investment chief anticipates further volatility over the next several weeks, he said he anticipates stocks can again rise over the intermediate term, and gain another 10% from here. “Especially with the AI trade, those expectations have been ramped up. And so, we would probably be a little bit cautious in terms of getting exposure to those names ahead of earnings releases because that bar is quite high,” Ladner said. “But if we do get a sell-off associated with those releases that don’t hit up on those raised expectations, it probably is, we think, a better buying opportunity than a selling opportunity at that point,” Ladner added. He also advised investors to start adding exposure to other interesting assets such as in Europe, or in small caps, which could jump after the central bank cuts rates later this year. Consumer focus Wall Street is also anticipating commentary from consumer-facing companies next week that could give insight into the state of the economy. Investors are hoping that consumer spending, which has thus far held up the economy in the face of higher prices, remains robust. Earnings results from Visa, for example, will be on deck. “From a sentiment standpoint, consumers don’t feel very good, but they haven’t acted like that for the better part of years,” Horizon’s Ladner said. “So, the bigger thing that we’ve been looking for and look for this quarter, is, are the consumers still acting like they’re in good shape? Even if they feel a little bit down in the dumps because they don’t like the price that they’re paying for things, are they are they still paying those prices? Are they still borrowing? Are they still consuming?” “So long as that is continues to be the case, which we expect it to be, we think this consumer-facing company is probably going to have a pretty good rebound in the second half of the year,” Ladner added. On the economic front, next week will also bring the first-quarter gross domestic product number. Economists polled by FactSet are anticipating the U.S. economy will have expanded by 3.1%, in line with the prior reading. Week ahead calendar All times ET. Monday, April 22 8:30 a.m. Chicago Fed National Activity Index (March) Earnings: Verizon Communications, Ameriprise Financial , Truist Financial Tuesday, April 23 8 a.m. Building Permits final (March) 9:45 a.m. PMI Composite preliminary (April) 9:45 a.m. Markit PMI Manufacturing preliminary (April) 9:45 a.m. Markit PMI Services preliminary (April) 10 a.m. New Home Sales (March) 10 a.m. Richmond Fed Index (April) Earnings: Baker Hughes , Visa , Enphase Energy , Tesla , NextEra Energy , Freeport-McMoRan , Philip Morris International , Halliburton , United Parcel Service , PepsiCo , Lockheed Martin , Raytheon Technologies , GE Aerospace Wednesday, April 24 8:30 a.m. Durable Orders preliminary (March) Earnings: Chipotle Mexican Grill , International Business Machines , Lam Research , Ford Motor , Align Technology , Waste Management , Universal Health Services , Raymond James Financial , Meta Platforms , Boeing , Hilton Worldwide Holdings , AT & T Thursday, April 25 8:30 a.m. Continuing Jobless Claims (04/13) 8:30 a.m. GDP (Q1) 8:30 a.m. Initial Claims (04/20) 8:30 a.m. Wholesale Inventories preliminary (March) 10 a.m. Pending Home Sales (March) 11 a.m. Kansas City Fed Manufacturing Index (April) Earnings: T-Mobile US , Capital One Financial Corp, Intel , Western Digital , Microsoft, Alphabet , Comcast , American Airlines Group , Southwest Airlines , Valero Energy , Caterpillar , Tractor Supply , Royal Caribbean Group , PG & E, GE Vernova Friday, April 26 8:30 a.m. PCE Deflator 8:30 a.m. Personal Consumption Expenditure 8:30 a.m. Personal Income 10 a.m. Michigan Sentiment NSA final Earnings: T. Rowe Price Group , Colgate-Palmolive , Exxon Mobil , Chevron , AbbVie , Phillips 66
Discussion about this post