What you need to know this week

The coming week will provide investors with more data on how some of the biggest players in American business started the year, with tech giants like Amazon (AMZN), Microsoft (MSFT), Alphabet (GOOGL) and Meta Platforms (META) all set to report quarterly results.

Investors will also be keeping a close eye on Thursday’s release of the first quarter GDP estimate, which is expected to show the U.S. economy growing at an annualized rate of 2% in the first three months of the year.

Major averages closed last week’s trading down slightly, with earnings reactions proving mixed over the week. None of the major indexes recorded a weekly move above the Nasdaq’s 0.42% decline.

Investors are expecting this earnings season to bring a second consecutive quarter of declining profits for US companies.

FactSet data released on Friday showed that through April 21, S&P 500 earnings are expected to fall 6.2% in the first quarter when combining the results already released with those expected by analysts. A week ago, S&P 500 earnings were expected to fall 6.7% in the quarter.

If profits fell 6.2% in the quarter, it would be the biggest drop in profits since the 31.6% drop in profits recorded in the second quarter of 2020.

Until last week, companies reported earnings 5.8% above estimates, below the 5-year average of 8.4% and below the 10-year average of 6.4%.

“We’re getting a lot of mixed indications from different reporting companies, even those in the same industry,” Thomas Martin, portfolio manager at GLOBALT Investments, told Yahoo Finance Live on Friday.

“I fear we may have to wait another quarter or two before we get any definitive information one way or another.”

Results from Amazon, Microsoft, Alphabet and Meta will highlight the week ahead, with investors looking for updates on these companies’ artificial intelligence efforts as well as ongoing cost reductions.

A man takes a photo at Meta (formerly Facebook) headquarters in Menlo Park, California on November 9, 2022. - Facebook owner Meta will lay off more than 11,000 of its employees in

A man takes a photo at Meta (formerly Facebook) headquarters in Menlo Park, California on Nov. 9, 2022. (Photo by JOSH EDELSON/AFP via Getty Images)

“Expectations are low,” DA Davidson analyst Tom Forte told Yahoo Finance Live on Friday.

Forte pointed to consistent layoffs across the industry during the quarter, a sign that things are only getting weaker in the tech sector.

“If they’re laying people off, especially at the end of the quarter, that suggests the macro challenges are getting tougher,” Forte said. “I think when you combine the banking industry’s financial mini-crisis and the Roku and Pinterest layoffs, it suggests that digital advertising may have taken a step backwards in the March quarter.”

A Bloomberg report last week said Meta officials had been told to brace for additional layoffs at its Facebook, WhatsApp and Instagram units.

On the economic data side, many economists believe that the first quarter will be the high point of the year for economic growth.

Thursday’s GDP report comes amid conflicting data on whether the economy is growing or contracting. And while Thursday’s report will likely show the economy growing in the first quarter of the year, nearly all of that growth took place in January, according to Oxford Economics.

“The mixed April survey data released so far points to a further slowdown early in the second quarter,” Oxford Economics chief U.S. economist Michael Pearce wrote in a note last week. “Meanwhile, early signs indicate that tighter bank lending standards are starting to bite, but the full impact on business will not be evident until later this year.”

Investors were initially disappointed with the results of Goldman Sachs (GS) and Netflix (NFLX), as shares of the two names traded before rallying through the end of the week.

Reports from a number of regional banks released last week showed that while some of the deepest market fears for the sector have yet to materialize, billions of dollars in deposits have left these institutions and the cost of retention of deposits skyrocketed.

Investors weren’t as lenient with Tesla (TSLA), however, as the electric vehicle maker’s shares fell more than 10.5% on the week, with analysts fearing the automaker may need to continue lowering prices. to stimulate demand.

“They’re backed into a corner,” Guggenheim analyst Ronald Jewsikow told Yahoo Finance Live after Wednesday’s report. “They’ve put up a lot of supplies that need to find a home. And the only tool they really have is to cut prices.”

Economic calendar

Monday: Chicago Fed National Activity Index, March (-0.19 previously); Dallas Fed Manufacturing Survey, March (-12 expected, -15.7 previously)

Tuesday: FHFA house price index, February (-0.2% expected, -0.2% previously); S&P Case-Shiller house prices, month over month, February (-0.35% expected, -0.3% previously); S&P CoreLogic Case-Shiller House Prices, YoY, Feb (-0.10% expected, +2.55% in prior month); the US National S&P CoreLogic Case-Shiller House Price Index (3.79% in the prior month); Conference Board Consumer Confidence, April (104.1 expected, 104.2 previously); Richmond Fed Manufacturing Index, April (-8 expected, -5 previously); New home sales, month-over-month, March (-1.6% expected, 1.1% previously)

Wednesday: MBA mortgage applications, week ended in April. 21 (-8.8% previously); Advanced merchandise trade balance, March (-$90.0 billion expected, -$91.6 billion previously); Wholesalers’ inventories, month-to-month, March (+0.2% expected, +0.1% previously)

THURSDAY: GDP for the first quarter, first estimate (+2% expected, +2.6% previously); Durable goods orders, March (+0.9% expected, -1% previously); Personal consumption, first quarter (+4% expected, +1% previously); Core PCE in the first quarter, quarter on quarter, (+4.7% expected, +4.4% before); Initial jobless claims (250,000 expected, 245,000 in the previous week); Home sales pending, month-over-month, March (+1% expected, +0.8% previously)

Friday: employment cost index, first quarter (+1.1% expected, +1% previously); Personal income, month on month, March (+0.2% expected, +0.3% previously); Personal expenses, month over month, March (-0.1% expected, +0.2% previously); PCE Deflator, month on month, March (+0.1% expected, +0.3% previously); University of Michigan Consumer Sentiment, April (63.5 expected, 63.5 previously)

Earnings Calendar

Monday: Credit Suisse (CS), Cleveland Cliffs (CLF), Coca-Cola (KO), First Republic Bank (FRC), Philips (PHG), Whirlpool (WHR)

Tuesday: Alphabet (GOOGL), Chipotle Mexican Grill (CMG), General Electric (GE), General Motors (GM), Juniper Networks (JNPR), McDonald’s (MCD), Microsoft (MSFT), PepsiCo (PEP), Raytheon Technologies (RTX) , Spotify (SPOT), Texas Instruments (TXN), UPS (UPS), Verizon (VZ), Visa (V), 3M Company (MMM)

Wednesday: Align Technology (ALGN), Automatic Data Processing (ADP), Boeing (BA), Boston Scientific (BSX), Cenovus Energy (CVE), General Dynamics (GD), Hess Corporation (HES), Hilton Worldwide (HLT), Meta Platforms (META), Pioneer Natural Resources (PXD), Roku (ROKU), ServiceNow (NOW), Teladoc (TDOC)

THURSDAY: Amazon (AMZN), American Airlines (AAL), Amgen (AMGN), Caterpillar (CAT), Crocs (CROX), Eli Lilly (LLY), Gilead Sciences (GILD), Intel (INTC), Mastercard (MA), Merck ( MRK), Pinterest (PINS), Snap (SNAP), Southwest Airlines (LUV), Valero Energy (VLO), United States Steel (X)

Friday: Aon (AON), Exxon Mobil (XOM), Cameco (CCJ), Charter Communications (CHTR), Chevron (CVX), Colgate-Palmolive (CL), Gentex (GNTX), New York Community Bancorp (NCYB)

Josh is a reporter for Yahoo Finance.

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