Last week’s quarterly results from Netflix and Tesla helped set the tone for the March quarter earnings season – Netflix’s gloom dominated over Tesla’s boom.
This week, with nearly 180 companies in the S&P 500, worth roughly half of the benchmark index’s market value, due to report results this week, the betting is for the market to remain unsettled as investors focus more on the Fed meeting next week rather than the details in the myriad earnings reports.
Twitter’s report on April 28 will be watched very closely with Elon Musk stalking the company waving a large wad of money. There is talk the Twitter board and Musk are negotiating a deal.
Comcast also reports on Thursday and Apple and Amazon report after the closing bell, so a big day but before that, Tuesday sees Microsoft and Alphabet reporting, then Meta on Wednesday.
So it could be all over bar the rate rise next week.
After to the poor report from Netflix, the weakened investor confidence was further battered on Friday by comments from Fed chair, Jay Powell who reasserted the central bank’s determination to whack inflation as hard as possible and as quickly as possible.
The S&P 500 has fallen in April and is now down 10.4% so far this year after a sharp selloff on Friday.
With monetary policy weighing on stocks, bullish investors are counting on a solid corporate outlook to support markets, ratcheting up pressure on companies to report solid bottom-line results and forecasts. S&P 500 companies are estimated to increase earnings by 9% this year, according to market forecasts.
The AMP’s Shane Oliver, though, is a bit more optimistic, writing in his weekly note:
“So far 20% of US S&P 500 companies have reported December quarter earnings with 78% beating expectations (compared to a norm of 76%). Consensus earnings expectations for the quarter have moved up from 4.3%yoy a week ago to now 5.8%yoy but with the average beat running at around 8% its likely to end up at around 12%yoy.
“This is well down from the growth pace seen in the previous four quarters but they were pushed up by the initial recovery from the pandemic. Energy, materials and industrials are seeing the strongest earnings growth. The continuing strength in earnings is an ongoing source of support for the US share market – key to watch going forward though will be the impact of rising costs,” Dr Oliver reminded investors.
Investors will focus on the reports Apple, Microsoft, Amazon and Alphabet, which combined have a market value of about $US8 trillion and make up 20% of the value of the S&P 500.
All of those megacap stocks have declined this year, with Apple down about 9%, Amazon off 13.4%, Alphabet down 17.4% and Microsoft falling 18.5%. Nasdaq is down just over 18% so only Apple and Amazon have ‘outperformed’.
Aside from the top four firms, results are due from a range of companies including Facebook owner Meta Platforms, payment companies Visa and Mastercard , oil majors Chevron, Total and Exxon Mobil, and consumer companies like Pepsico (Coca Cola reported overnight Monday), McDonald’s.
Big US defence stocks like Northrop Grumman, Boeing and General Dynamics are also down to report this week, along with Dassault in France (see separate story).
Drug companies like Pfizer, Eli Lilly, Novartis, Astra Zeneca and GSK. Other techs include Qualcomm, Texas Instruments (and Atlassian in Australia and Resmed), big manufacturers like Honeywell and Caterpillar, car makers like GM and Ford, 3M, Bayer, Daimler, BYD, China’s biggest EV maker, Comcast, the big media group and PayPal.
Next weekend will be dominated by Berkshire Hathaway’s March quarter results and then the company’s first in person annual meeting in three years all day Saturday in Omaha, Nebraska.
That could be a historic meeting for what happens after it – Vice Chair, Charlie Munger has stepped down from the board of a small LA-based media company he has long chaired. Could the next move be to step down from the Berkshire board?
In Australia there’s more quarterly reports, led by Fortescue Metals and Newcrest with updates also expected from De Grey and Chalice.
