Earnings news will keep investors busy as the next rate hike by the US Federal Reserve (Fed) draws near, and markets will be volatile next week. His diverse group of over 80 S&P 500 companies reports, including industries such as Boeing and transportation industries such as Union Pacific, CSX and Southwest Air. With reports from IBM, Intel, and Microsoft, Big Tech is starting to put in the numbers, too. Financials are reported by Visa and Mastercard, as are pharmaceuticals by Johnson & Johnson and Abbott Labs. Tesla will announce the results on Wednesday. There is no Fed speech on the calendar as the Fed will meet on his January 31st and his February 1st. “The Fed is a story on page one and a broader market dynamic,” said Leo Grochowski, chief investment officer at BNY Mellon Wealth Management. “I think we are seeing the right reaction to company-specific news. I think we will see more of that over the next week as the Fed is in a blackout period. Focusing on company-specific fundamentals is encouraging. But the calendar is chock-full of economic data, like fourth-quarter gross domestic product and durable goods on Thursday. S&P Global PMI data were released on Tuesday for both services and manufacturing. On Friday, we have consumer sentiment and personal spending data, including his PCE deflator, the Fed’s favorite inflation indicator. “It’s just a countdown to the Fed,” said Ian Ringen, head of U.S. rates strategy at BMO. “First look at Q4 GDP, but no one expects a recession to start in Q4. Even upside surprises and downside misses don’t change the macro narrative.” Atlanta Fed ‘s GDPNow tracker shows that gross domestic product increased by 3.5% in the fourth quarter. The PCE deflator will be reported on Friday, so the market will be watching for signs of higher or lower than expected inflation. Lingen said the market expected the Fed to raise rates by 0.5 percentage points on February 1, but some economists see a 0.5 percentage point hike more likely. said there is. Futures markets are also predicting a possible rate cut this year, but the Fed does not expect a rate cut until next year. “The market continues to think that the Fed doesn’t need to do as many drugs as the Fed is planning. I think those who are fighting the Fed are the dissenters here,” Grohaussky said. Stated. “The Fed just keeps reminding us that ‘if you want a pivot, we’re not there,'” Grohowski said, instead saying the Fed would continue to raise rates and then hold out. rice field. “Hope is forever, but when it comes to the Fed pivot, I honestly think we need to think about 2024. Earnings, Earnings, Earnings Stocks fell last week as the S&P 500 fell 1.8%. is up 2.2% for the year so far, but the Dow is slightly negative in 2023. The Dow has fallen 3.5% over the past week.SPX 1Y line sp Most fell, like Goldman Sachs, which plummeted on Tuesday when earnings fell short of expectations, while Netflix underperformed earnings forecasts on Thursday but was surprised by more new subscribers than expected. CFRA chief investment strategist Sam Stovall said, “Netflix missed out, but was applauded for getting more subscribers in the end.” While it varies from company to company, we do see a downward shift in growth expectations, and as we’ve seen with Amazon, Microsoft and Alphabet, job declines are ominous on both a macro and micro level. Analysts widely expect earnings estimates to fall as the quarter progresses. Grohowski said those falling expectations are likely to drive the stock price down as well. “As earnings season comes to an end, I think our view remains that valuations are problematic. The Fed is tightening a clearly weakening economy,” he said. He pointed to housing weakness and his 11th month decline in existing home sales. “Clearly there are sectors of the economy that are already in recession,” he said. “We expect a 70% chance of a recession. It’s not reflected in earnings yet. We expect earnings in 2023 to make the necessary adjustments.” Unless we raise interest rates above 5.1%, we expect a short, shallow recession. He said there is a risk of a hard landing if the central bank tightens too much. Earnings data already shows expectations and revenues are declining, Stovall said. “Earnings continue to pull. On Dec. 31, the S&P was expected to show a 2.9% year-over-year decline in the fourth quarter, but now he’s down 3.3%,” Stovall said. says. The data he obtained from S&P Global is based on actual and estimated returns. “Revenue was expected to grow by 6%, now he is up by 4.9%. Revenue in 2023 is also [for the year] It was expected to rise by 2.8%. Refinitiv data shows that the quality of earnings is declining. So far, 63.6% of companies have beaten expectations, well below the average of 76% over the past four quarters. Beat sizes are also getting smaller. According to Refinitiv, S&P companies have outperformed earnings projections by 2.3%. S&P Global’s estimates for the first quarter showed a decline of 1.3%, with a 2.9% decline expected in the second quarter, Stovall said. It’s a recession, but it’s a recession. We’re adding straw to the camel’s back.” Grohowski said he’s watching the impact of profit margins and inflation, and expects inflation to continue to decline. Procter & Gamble sees higher prices this week “For several quarters, everything passed, and P&G’s numbers showed pressure on margins,” Grohowski said. said investors are hopeful they can expect an improvement in the second half of 2024. The S&P 500 is also forecast to end the year at 4,150. No doubt about it. Union Pacific, DR Horton, Raytheon, Intuitive Surgical, F5 Networks, Paccar, GATX, Canadian National Railway 9:45 am S&P Global Manufacturing PMI [January flash] 9:45 a.m. S&P Global Services PMI [January flash] Earnings Wednesday: Tesla, Boeing, IBM, AT&T, CSX, Elevance Health, US Bancorp, Whirlpool, Nasdaq, Abbott Labs, Norfolk Southern, General Dynamics, Textron, Knight-Swift Transportation, Ethan Allen, Levi Strauss, Steel Dynamics , United Rentals, Ameriprise, Hess, Kimberly-Clark, LendingClub, Lam Research, SL Green, Flex Tuesday Earnings: Intel, Visa, Comcast, SAP, Dow, Southwest Air, Blackstone, Mastercard, KLA Corp, Federated Hermes, LG Display, Archer Daniels Midland, Marsh & McLennan, Nucor, Tractor Supply, Diageo, Nokia, Weyerhaeuser, T. Rowe Price, Rockwell Automation, Valero Energy, McCormick, Xcel Energy, Murphy Oil [December] 8:30 a.m. Real GDP [Q4 advance] 8:30 a.m. Leading economic indicators [December] 10:00 New house sale [December] Friday Earnings: American Express, Chevron, Colgate-Palmolive, Booz Allen Hamilton, Charter Communications, HCA Holdings 8:30 AM Personal Earnings/Expenses [December] 10:00 am Pending Home Sale [December] 10 a.m. Consumer psychology [January]
