Earnings season continues to roll along, and the focus this week will be on a number of large cap stocks reporting, especially some big tech names. Expectations are high for the slew of companies reporting this week (about one-third of the S&P 500 are announcing), as corporate America has been largely beating expectations for both sales and earnings. Investors have become accustomed to management guidance generally indicating that margin pressures will continue, but that price increases are successfully providing an offset. Indeed, any companies varying far from this trend are likely to see their stock prices take a hit.
Monday’s positive session was welcome news for investors, as last Friday marked four straight down weeks for the Dow Jones Industrial Average, while the S&P 500 and NASDAQ logged their third-consecutive weekly declines. All three indexes began the day in the loss column after stocks in China had their worst session in over two years. However, stocks rallied late in the day to end in the green. The Dow Jones Industrial Average, which at one point was down nearly 500 points, closed up 238 points, or 0.7%, the S&P 500 gained 24 points (+0.6%), and the tech-laden NASDAQ led the pack, advancing 165 points or 1.3%.
In terms of sector performance, advancers led decliners by a good margin, led by communication services (+1.5%), technology (+1.4%), and consumer discretionary issues (+.8%). Energy stocks took the biggest hit, falling 3.3%. The price of Brent crude oil, which is the international benchmark, dropped 4.1%, to about $102.30. The decline reflected broader Covid-19 lockdowns in China, which raised fears of further supply-chain hiccups and falling demand for petroleum.
U.S. stock futures are indicating a negative open for the start of today’s trading. Elsewhere, Asian markets were mixed overnight, while stocks in Europe are firmly in the green. Meanwhile, oil futures are up 1.4% after Russia’s Foreign Minister Sergei Lavrov suggested that the West’s stepped-up efforts to support Ukraine could lead to a potential world war involving nuclear weapons.
On the economic front this week, we’re getting the latest figures on new home sales and consumer confidence this morning. Thursday brings initial and continuing jobless claims, as well as the first estimate for March Quarter GDP (gross domestic product). This will be followed Friday by the Personal Consumer Expenditures (PCE) Price Index, a measure of inflation, for March, as well as the latest figures for nominal personal income and consumer spending for last month, among other reports.
On the earnings front tech giants Alphabet (GOOG) and Microsoft (MSFT) will be reporting after the closing bell today, followed later in the week by Facebook (FB), Amazon.com (AMZN), and Apple (AAPL), among many others.
– Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
