Investors are closely watching the upcoming week as major tech giants, including Amazon, Microsoft, Alphabet, and Meta Platforms, are set to report their quarterly results. Meanwhile, Thursday's release of the first estimate of Q1 GDP will show the expected growth rate of 2% for the US economy. The previous week saw mixed reactions to earnings reports, with none of the major indexes logging a weekly move larger than the Nasdaq's 0.42% decline. Expectations are for a second straight quarter of decline in US corporate profits. According to FactSet, earnings for the S&P 500 are expected to decline 6.2% in Q1, marking the largest earnings decline since the 31.6% drop in Q2 2020.
Companies have been reporting earnings that are 5.8% above estimates, which is lower than the 5-year average of 8.4% and the 10-year average of 6.4%. Despite this, Thomas Martin, portfolio manager at GLOBALT Investments, suggests that we will have to wait for another quarter or two before we get definitive information.
Amazon, Microsoft, Alphabet, and Meta Platforms' earnings reports will provide further insights into their AI efforts and ongoing cost cuts. However, expectations are low, with Tom Forte, an analyst at D.A. Davidson, pointing to consistent layoffs across the sector during the quarter as a sign of weakening in the tech sector. He also suggests that digital advertising may have taken a step backwards in the March quarter.
On the economic data side, economists believe that Q1 will be the year's high water mark for economic growth. However, conflicting data on whether the economy is growing or contracting has led to uncertainty. Although the GDP report on Thursday is expected to show the economy's growth, Oxford Economics highlights that nearly all of that growth came in January.
Results from Goldman Sachs and Netflix were initially disappointing, while Tesla's shares fell more than 10.5% on the week as analysts fear that the automaker may need to keep lowering prices to spur demand. Overall, the market remains uncertain, and investors are waiting for more definitive information before making any decisions.
Economic Calendar:
As we start a new week, there are several economic indicators to watch. On Monday, the Chicago Fed National Activity Index for March will be released, with a previous reading of -0.19. Additionally, the Dallas Fed Manufacturing Survey for March is expected to be released with a forecasted reading of -12, down from the previous reading of -15.7.
Moving on to Tuesday, we have several key housing market indicators to watch, including the FHFA Housing Pricing Index for February, which is expected to remain unchanged at -0.2%. The S&P Case-Shiller home prices, both month-over-month and year-over-year for February, are also set to be released. The month-over-month reading is expected to decline slightly to -0.35%, while the year-over-year reading is expected to drop to -0.10%, from +2.55% in the prior month. Additionally, the Conference Board Consumer Confidence Index for April will be released, with a forecasted reading of 104.1, down slightly from the previous reading of 104.2. Finally, the Richmond Fed Manufacturing Index for April is expected to decline to -8, down from the previous reading of -5, and the New Home Sales for March are expected to decline by 1.6%, compared to a previous reading of +1.1%.
On Wednesday, we'll get the MBA Mortgage Applications for the week ended April 21, with a previous reading of -8.8%. The Advance Goods Trade Balance for March is also expected to be released, with a forecasted reading of -$90.0 billion, down from the previous reading of -$91.6 billion. Finally, the Wholesale Inventories for March are expected to rise by 0.2%, up from the previous reading of +0.1%.
Thursday is a big day for economic data releases, with the first estimate for Q1 GDP set to be released, with a forecasted reading of +2%, down from the previous reading of +2.6%. Additionally, Durable Goods Orders for March are expected to rise by 0.9%, up from the previous reading of -1%. Personal Consumption for the first quarter is expected to rise by 4%, up from the previous reading of +1%, and the first quarter Core PCE, quarter-over-quarter, is expected to rise to +4.7%, up from the previous reading of +4.4%. Furthermore, the Initial Jobless Claims are expected to increase slightly to 250,000, up from the previous reading of 245,000, and the Pending Home Sales for March are expected to rise by 1%, up from the previous reading of +0.8%.
Finally, on Friday, we have several more key indicators to watch, including the Employment Cost Index for the first quarter, which is expected to rise by 1.1%, up from the previous reading of +1%. Personal Income for March is expected to rise by 0.2%, down slightly from the previous reading of +0.3%, while Personal Spending for March is expected to decline by 0.1%, down from the previous reading of +0.2%. The PCE Deflator for March is expected to decline to +0.1%, down from the previous reading of +0.3%, and the University of Michigan Consumer Sentiment Index for April is expected to remain unchanged at 63.5.
Earnings Calendar:
As we head into the last week of April, many companies are set to report their quarterly earnings. On Monday, Credit Suisse, Cleveland Cliffs, Coca-Cola, First Republic Bank, Philips, and Whirlpool are among the companies scheduled to release their financial results.
Tuesday is expected to be a busy day for earnings, with Alphabet, Chipotle Mexican Grill, General Electric, General Motors, Juniper Networks, McDonald's, Microsoft, PepsiCo, Raytheon Technologies, Spotify, Texas Instruments, UPS, Verizon, and Visa all set to report.
On Wednesday, Align Technology, Automatic Data Processing, Boeing, Boston Scientific, Cenovus Energy, General Dynamics, Hess Corporation, Hilton Worldwide, Meta Platforms, Pioneer Natural Resources, Roku, and ServiceNow are among the companies releasing their earnings reports.
Thursday will see Amazon, American Airlines, Amgen, Caterpillar, Crocs, Eli Lilly, Gilead Sciences, Intel, Mastercard, Merck, Pinterest, Snap, Southwest Airlines, Valero Energy, and United States Steel reporting their quarterly financial results.
Finally, on Friday, Aon, Exxon Mobil, Cameco, Charter Communications, Chevron, Colgate-Palmolive, Gentex, and New York Community Bancorp are scheduled to release their earnings reports.
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