As the U.S. stock market rally finds its stride, optimism is rising toward stocks, the economy and the Fed’s battle to manage inflation. Hong Kong’s market also reopened to a strong performance this week, with China’s mainland Shanghai and Shenzhen stock exchanges set to restart on Monday after their weeklong Lunar New Year’s breaks. All of those factors are likely to influence how investors respond to a massive news week that wraps up January. A Fed rate decision, an OPEC meeting, a heavy docket of Big Tech, automotive, Big Oil, Big Pharma and other earnings reports set the stage for a rousing week of market activity.
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Stocks To Watch: Five Stocks Near Buy Points
The stock market rally continues to show broad-based strength. Investors should be looking across sectors for buying opportunities. Wingstop (WING), Lam Research (LRCX), Halliburton (HAL), Boeing (BA) and JD.com (JD) are all near buy points. WING stock and JD.com are flashing early entries, while oil field services giant Halliburton is in a buy range. Lam Research is just below a buy point. Boeing, after a big run, has formed a handle on a big, long consolidation. Halliburton, Boeing and Lam Research have earnings out of the way.
Economic Calendar: Fed Rate Decision, January Jobs Report
With inflation slowing rapidly and the U.S. economy looking weak, the Federal Reserve is almost certain to further slow the pace of rate hikes to a quarter point with Wednesday’s 2 p.m. ET policy statement. Yet there’s still some suspense over whether the statement will drop its wording that committee members anticipate “ongoing increases” in the Fed’s key interest rate. Doing so could imply that the Fed is inclined to pause its rate hikes after perhaps one more quarter point in March.
The Fed’s New Key Inflation Rate Eased In December; S&P 500 Rises
Leaving in the language certainly wouldn’t rule out an early pause, so there’s not much to be gained by omitting those words. If they are axed from the statement, that could set off some stock market fireworks, which the Fed probably doesn’t want to see. Rather than a big change in the statement, expect a more subtle change in the Fed’s tone to be delivered by Chair Jerome Powell in his 2:30 p.m. Wednesday news conference.
Powell may not settle on his script until Tuesday. The Employment Cost Index, out at 8:30 a.m., is expected to show moderating wage pressures in Q4. But if wage pressures don’t ease as much as hoped, Powell may take a cautious tone, suggesting that the battle against inflation is far from won. The Fed will get some more key data on Wednesday morning. The Institute for Supply Management’s manufacturing survey index, which has been showing a contraction in activity, is out at 10 a.m. At the same time, the Labor Department will release its Job Openings and Labor Turnover survey for December. Friday’s jobs report for January, out at 8:30 a.m., will provide a more up-to-date picture of wage pressures, which Powell has highlighted as the key upside risk for inflation. Wall Street expects wage growth to slow to 4.3% as hiring slows to 185,000 from 223,000 in December.
Dow Earnings: Another Big Week For Blue Chips
After a huge week of earnings for the Dow, a half dozen other blue chips are set to report in the coming week. Outlooks from Apple (AAPL) and Caterpillar (CAT), as well as McDonald’s (MCD) and Amgen (AMGN) will provide insight on how inflation, China and supply chain challenges might pan out for 2023. When the week is done, the year-end quarters for almost 25 of 30 Dow industrials will be accounted for.
Apple Sales, Earnings Seen Falling
Consumer electronics giant Apple (AAPL) plans to release its fiscal first-quarter results late Thursday. Analysts polled by FactSet expect Apple to earn $1.94 a share on sales of $121.8 billion in the December quarter. That would translate to year-over-year declines of 8% in earnings and 2% in sales. A difficult macroeconomic climate is pressuring sales of iPhones and other Apple devices. Also, Apple suffered supply constraints from Covid-related production slowdowns at its main iPhone factory in China last quarter. Investor focus will be on the March quarter. Wall Street currently expects Apple to earn $1.49 a share, down 2%, on sales of $97.5 billion, up a fraction.
Caterpillar: Infrastructure Bellwether
Caterpillar (CAT) posts Q4 earnings before Tuesday’s open. The Dow Jones construction and mining equipment giant is seen growing EPS 49% to $4.02 on 17% sales growth to $16.1 billion. CAT stock scored another record high on Friday. It’s being propelled by an improving global growth outlook as China reopens and the reshoring of manufacturing and ramping infrastructure spending in the U.S.
A Consumer Checkup From McDonald’s
McDonald’s (MCD) reports Q4 earnings results early Tuesday. Adjusted earnings are expected to rise 10.3% to $2.46 per share on a 4.7% dip in revenue to $5.7 billion. Earnings growth slowed for three quarters before declining in Q3 and sales fell the past two quarters.
FANG Stocks: Meta, Amazon, Alphabet
Meta Platforms (META) reports fourth-quarter results after the close Wednesday. Expectations are that the company formerly known as Facebook will report earnings of $2.26 a share, down 38%. Analysts expect revenue of $31.5 billion, flat with the year-ago period. The social media company is starting to rebound from the Apple privacy change that caused the social media giant to lose billions in digital ad revenue last year. Credit Suisse analyst Stephen Ju in a report said that technology improvements with its advertising strategy approach should lead to “gradual improvements to Meta’s revenue dollar growth.”
January is named after Janus, the Roman god of beginnings and transitions. February is derived from the Latin term februum, or purification, and is related to the mid-month purification ritual Februa.
Amazon.com (AMZN) reports fourth-quarter results after the close Thursday. The Street expects earnings to plunge 95% to 17 cents a share. That follows a 10% drop in the prior quarter. The consensus on revenue is $145.6 billion, up 6% but a slowdown from a 15% rise in the prior quarter. Amazon’s stock plunged in late October after it reported third-quarter results that beat on earnings, but it gave an outlook that fell short. The e-commerce giant wrapped up 2022 as its worst year since 2000, the year of the dot-com crash. The company is currently in the midst of cutting 18,000 jobs.
Analysts have been lowering estimates ahead of Google-parent Alphabet‘s (GOOGL) Q4 earnings report on Feb. 2. Analysts estimate EPS of $1.18, down 22% from a year earlier. Analysts see revenue up 1.6% to $76.5 billion. YouTube is likely to be a weak spot. Alphabet recently said it will cut 6% of its global workforce.
Drugmakers: Pfizer, Merck, GSK, Amgen, Eli Lilly
Big Pharma earnings season will hit in a big way next week with reports from a slew of major players. The week kicks off with Pfizer (PFE) and Amgen (AMGN) on Tuesday. Analysts expect Pfizer to report adjusted earnings of $1.07 per share before the opening bell, on $24.67 billion in sales. Earnings would dip a penny year over year while sales climb about 3.5%. Wall Street forecasts declines for Amgen with earnings seen falling 6% and sales down almost 2%. GSK (GSK) is on deck Wednesday. Analysts predict profit will tumble 21% to 55 cents per share and sales will dive 31% to $8.88 billion.
Merck (MRK), Bristol Myers Squibb (BMY) and Eli Lilly (LLY) will follow early Thursday with Gilead Sciences (GILD) reporting after the close. Consensus views call for a mixed quarter from Merck with earnings down as sales inch higher. Analysts predict sales and earnings declines from both Bristol and Lilly, but call for Gilead to report adjusted profit of $1.50 a share, soaring 117%. Analysts see Gilead’s sales, on the other hand, down 8% to $6.65 billion. Regeneron Pharmaceuticals (REGN) and Sanofi (SNY) will wrap up the week early Friday. The duo partner on several drugs, but Sanofi’s metrics are expected to climb while Regeneron’s fall.
AMD Headlines Chip Earnings
A host of big-name chipmakers, including AMD (AMD) and Qualcomm (QCOM), will report December-quarter earnings in the week ahead. NXP Semiconductors (NXPI) will deliver its fourth-quarter results late Monday. Allegro MicroSystems (ALGM) will post its December-quarter results early Tuesday, followed by AMD after the stock market close. Wednesday will bring earnings reports from MaxLinear (MXL), Qorvo (QRVO) and Silicon Labs (SLAB). And Thursday will see quarterly reports from Cirrus Logic (CRUS), Microchip Technology (MCHP) and Qualcomm (QCOM).
Big Week For Big Oil: XOM, COP, OPEC
Earnings season for energy companies is in full swing with ConocoPhillips (COP) and Exxon Mobil (XOM) set to report Q4 earnings next week. Exxon reports early Tuesday. Analysts predict earnings growing 60% to $3.29 per share. Analysts see a 15% sales advance to $97.35 billion. Before ConocoPhillips reports early Thursday, ministers from the Organization of Petroleum Exporting Countries and its allies, including Russia (OPEC+) will meet on Wednesday. OPEC is widely expected to maintain current oil production levels but may discuss possible policy tweaks. Wall Street forecasts COP’s revenue increasing 14% to $18.2 billion while EPS is expected to grow 20% to $2.72.
Ford, General Motors Report
Automakers report in with General Motors‘ (GM) fourth quarter on Tuesday and Ford (F) on Thursday. Analysts warn that automakers are swapping supply challenges for demand woes, amid the rise in inflation and interest rates. GM claimed the No. 1 spot for U.S. auto sales in 2022, with a second-half recovery offsetting a sharp slump in the first six months amid supply disruptions. Analysts polled by FactSet expect GM earnings to rebound 25% to $1.68 per share, in part reflecting an easy year-ago comparison. Revenue is seen recovering 19% to $39.952 billion.
Ford wraps up a challenging year for its vehicle sales, though Ford took the No. 2 spot for U.S. EV sales in 2022, but still a distant second to Tesla (TSLA). Ford plans to report January U.S. sales on Feb. 2 as well. Analysts polled by FactSet expect Ford earnings to rebound 139% to 62 cents per share, reflecting an easy year-ago comparison. Analysts target 12% revenue growth, year over year, to $42.094 billion.
Stock Market Earnings Briefs
Monday
Helmerich & Payne (HP) reports Q1 2023 earnings late Monday. Analysts expect 82 cents earnings per share, up from a loss of 45 cents a year ago. Wall Street predicts revenue growing 63% for the contract oil drilling company, to $669 million. After nine straight quarterly losses, Helmerich & Payne has posted profits in the last two quarters.
Tuesday
Exxon Mobil (XOM) reports fourth-quarter earnings before the stock market opens. Analysts predict earnings growing 60% to $3.29 per share. Analysts target a 15% sales advance 15% to $97.35 billion. Exxon has record profits in 2022 and has averaged 225% EPS growth rate over the last three quarters.
Snap (SNAP) reports fourth-quarter results after the close Tuesday. Analysts expect an 11-cent loss, its fourth quarter in a row of declines. The consensus on revenue is $1.06 billion, up 38% for the social media company. Snap stock plunged to levels not seen in more than three years when it reported third-quarter results. That raised alarm bells among analysts. Snap is in the process of cutting its workforce by 20%.
Western Digital (WDC) reports fiscal second-quarter results late Tuesday. Analysts expect the disk-drive manufacturer to report 15 cents EPS, vs. $2.30 in the year-ago period. The consensus on revenue is $2.98 billion, down 38%. Western digital’s earnings follow that of its primary competitor Seagate Technology (STX). Shares of Seagate jumped 11% Thursday after the company reported better-than-expected quarterly results.
United Parcel Service (UPS) reports fourth quarter results Tuesday morning after recording positive earnings and revenue growth throughout the fiscal year. Q4 earnings estimates are flat year over year at $3.59 per share as revenue ticks up less than 1% to $28 billion.
Electronic Arts (EA) plans to announce its December-quarter results late Tuesday. Analysts expect the video game publisher to earn $3.04 a share, down 4%, on sales of $2.47 billion, also down 4%.
Edwards Lifesciences (EW) will report its fourth-quarter earnings late Tuesday. Analysts call for adjusted income of 61 cents a share on $1.33 billion in sales. Earnings would climb almost 20%, but sales would come in flat.
Wednesday
Altria Group (MO) reports Q4 results early Wednesday following six quarters of earnings gains and three quarters of declining sales. Wall Street forecasts America’s largest tobacco company to report 7.4% earnings growth to $1.17 per share on 1.2% sales growth to $5.15 billion.
Align Technology (ALGN) will report its quarterly results after the close Wednesday. The Street predicts earnings will topple 46% to $1.53 a share, minus some items. Analysts also call for $892 million in sales, down 13.5%.
Thursday
United States Steel (X) will release fourth-quarter results late Thursday. Analysts predict EPS falling 85% to 54 cents per share while sales fall 28% to $4.03 billion. The steel manufacturer has averaged 44% earnings growth over the last three quarters, buoyed by a 182% increase in Q1 2022.
Friday
Logistics and shipping company ArcBest (ARCB) is expected to report an 8.6% adjusted earnings decline to $2.55 per share for its fourth quarter Friday morning, which would be the first decrease in nine quarters. Revenue is seen rising for the 10th quarter in a row, growing 5.6% to $1.25 billion.
Zimmer Biomet Holdings (ZBH) is slated to report its fourth-quarter earnings before the stock market opens on Friday. Analysts expect adjusted earnings will slip 3% to $1.83 per share. They call for $1.76 billion in sales, down almost 14%.
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