MSFT,GOOG, AMZN pulls up US market this week?
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On Fri, 26 Jan 2024, US stocks bounced around before landing in mixed territory as investors digested December 2024 Core PCE report, ahead of Fed’s first FOMC meeting for 2024, next week. (see below)
Market’s gains were muted compared to the prior week’s rally after notable companies such as Intel and Tesla disappointed on the earnings front.
Inflation came in at a surprise 2.9%; marginally below market expectation of 3.0% and -0.3% lower than November’s Core PCE data.
This is the first inflation reading that is below 3% since the Fed started hiking the Fed Fund rate from 17 Mar 2022.
It is also the slowest rate of growth registered since March 2021.
Coupled with a hotter-than-expected preliminary estimate of 3.3% on 4th quarter US GDP (see above), the notion that the US economy is headed for a "soft landing" does not seemed too far-fetched now.
Overall, it has been a good week for all 3 Composite indexes:
DJIA: +0.50% (+189.88 to 38,109.43).
S&P 500: +0.77% (+37.55 to 4,890.97). Reached record high on Thu, 25 Jan 2024.
Nasdaq: +0.40% (+62.32 to 15,455.36). Intel’s fall from grace, dragged Nvidia & AMD along, resulting in tech index lagging its peers.
While corporate earnings continue to unfold, I wonder if you have been keeping tabs of companies quarterly earnings even if you may not have invested in them?
For example, $Visa(V)$ reported its Q1 2024 earnings on 25 Jan 2024 at 4:05 pm EST.
On the surface, it reported an earnings beat.
Earnings per share (EPS) adjusted: was $2.18. versus consensus of $2.01 per share.
Revenue: was $7.94 Billion, more than Wall Street’s expectations of $7.70 Billion, per Refinitiv.
However, some analysts noticed that Visa’s tepid revenue-growth forecast, also pointed to a slowdown in US payments volume growth has faded heading into 2024.
Could this be a sign that an impending economic slowdown is brewing down yonder? What do you think ?
This will be the busiest week of the earnings season, with 19% of the S&P 500 reporting earnings. To me, it is the make or break week !
How so ?
For one week only, the stars are aligned for the following events:
(1) Fed’s FOMC meeting on Jan 30-31.
Wall Street is confident that US Central Bank will keep interest rate status quo for the 4th time. What they are more interested to find out is when will the Fed initiate the first of three-interest cut.
(2) US Official reports.
The various labour, consumer confidence, manufacturing reports will be out this week; providing an insight into the possible state of the US economy.
Job Openings and Labour Turnover survey (JOLTs) - Tue, 30 Jan 2024.
CB Consumer Confidence report for January 2024 - Tue, 30 Jan 2024.
ADP Non-Farm Employment report for January 2024 - Wed, 31 Jan 2024.
US Weekly Jobless Claims report for week ending 20 Jan 2024 - Thu, 01 Feb 2024.
ISM Manufacturing Purchasing Manager Index (PMI) for January 2024 - Thu, 01 Feb 2024.
US Non-Farm Payroll report for January 2024 - Fri, 02 Feb 2024.
(3) Mega Cap companies Q4 2023 earnings report.
I think companies reporting their last quarter earnings for FY 2023 will exert a strong influence over, how the US stock market will behave for the rest of the week.
Mega Cap companies announcing their earnings: (see above)
$Alphabet(GOOG)$ - Tue, 30 Jan 2024.
$Microsoft(MSFT)$ - Tue, 30 Jan 2024.
AMD Inc - Tue, 30 Jan 2024.
$MasterCard(MA)$ - Wed, 31 Jan 2024.
Qualcomm (QCOM) - Wed, 31 Jan 2024.
$Amazon.com(AMZN)$ - Thu, 01 Feb 2024.
Meta Platform (META)$ - Thu, 01 Feb 2024.
Chevron (CVX)$ - Fri, 02 Feb 2024.
Exxon Mobil (XOM)$ - Fri, 02 Feb 2024.
AbbVie Inc (ABBV)$ - Fri, 02 Feb 2024.
Out of the above illustrious list of Mega cap companies, whose reports will help to rally the US market to the next “high” and which of them, will drag the 3 Composite indexes down?
My viewpoints: (mine & mine only)
With the newly crowned 3 Trillion dollar company Microsoft and Google firing the first salvo, I believed their earnings should keep US market bouyant.
I am “skeptical” about AMD because its current stock price is more hyped-based than results.
Mastercard's quarterly results should resemble Visa's ie. higher than market expectations. The key question is whether its US payments growth will accelerate or decelerate in 2024."
Will Q1 2024 results allow Qualcomm to prove that it is here to stay? Afterall, its Q4 2023 results exceeded Wall Street expectations for both top and bottom lines.
Will both Meta Inc and Amazon be able to hold the fort and allows US market to continue to power up to the next record level closing?
Surely, Amazon’s recent jobs elimination spanning its Prime Video, MGM Studios, Twitch and Audible divisions should appease analysts that the eCommerce giant is serious about keeping costs at bay?
Energy stocks leaders - Chevron and ExxonMobil are at the fork road. If their earnings are in positive terroritory this time round, the chances of a turnaround will be higher.
Pharmaceutical giant, AbbVie despite losing the “original” patent of its most profitable - Humira, it managed to ringfence the “additional” patents rights to Humira for another 10 years.
In the meantime, AbbVie entered into settlement agreements with various biosimilar manufacturers, allowing their entry into the US market since January 2023, where the “agreements” involved royalty payments and other terms, maintaing some level of protection and revenue stream for AbbVie. Its Q4 2023 earnings should be in the bag, no doubt about it.
Will all these giants be able to do their jobs to enable US market to chalk another record breaking week? Time will reveal the truth!
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Do you think the Mega Cap companies will hand in their stellar earnings report cards respectively?
Do you think the US market will be able to scale even higher if both quarterly earnings and the Fed collectively channel positive vibes into the market?
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