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Critical Week For Equities As Fed Meeting Looms – Earnings W/C 30/1

Earnings w/c 30/1 kicks off with a plethora of the biggest names in the markets under uncertain conditions. This week will undoubtedly pose a major challenge to the 2023 rally as mega-cap technology companies release their quarterly earnings reports at a critical juncture in the market.

After a strong hiring boom during the post-pandemic surge of 2021, Alphabet, Amazon, and Meta Platforms all announced large cutbacks in their workforces. One of the busiest weeks of the year on major earnings awaits, with early signs pointing downward.

earnings w/c 30/1

Fed Meeting looming puts downward pressure on the upward momentum

The Federal Open Market Committee (FOMC) is expected to raise rates by 25 basis points on Wednesday, indicating that the central bank has adopted a slightly less restrictive monetary policy than it had during its prior four meetings when it increased rates by 0.75%. Chair Jerome Powell has scheduled a press conference beginning at 2:30pm ET to discuss the decision.

According to EY Parthenon’s chief economist Gregory Daco, “Navigating this change while avoiding over-tightening will be essential for preventing market disruption.” The CME FedWatch Tool shows an almost certain expectation of the rate hike happening.

On Friday, employment data for January will be released and previous numbers suggest robust growth despite 425 basis points worth of rate hikes permeating through the economy between December and now. Many strategists fear wage pressures could cause inflationary issues if employers are unable to rein in costs; Alexandra Wilson-Elizondo from Goldman Sachs Asset Management warns against fighting with the Fed as they have demonstrated slower reactions on inflationary risk management compared to other years.

So far this quarter earnings season has been disappointing—with only 69% of S&P 500 companies beating estimates whereas 75% typically do—so investors focus on Amazon could prompt insight into consumer discretionary spending patterns as well as any potentially slowing growth in AWS cloud business profits.

Major earnings for W/C 30th Jan –

Monday: Alexandria Real Estate Equities (ARE), GE HealthCare (GEHC), Helmerich & Payne (HP), J&J Snack Foods (JJSF), Philips (PHG), SoFi Technologies (SOFI), Whirlpool (WHR)

Tuesday: Advanced Micro Devices (AMD), Amgen (AMGN), Boston Properties (BSX), Caterpillar (CAT), Exxon Mobil (XOM), General Motors (GM), Juniper Networks (JNPR), Marathon Petroleum (MPC), Match Group (MTCH), McDonald’s (MCD), Mondelez International (MDLZ), NVR (NVR), Pfizer (PFE), Phillips 66 (PSX), Pitney Bowes (PBI), Snap (SNAP), Sysco (SYY), UPS (UPS)

Wednesday: Meta Platforms (META), Aflac (AFL), Allstate (ALL), Boston Scientific (BSX) e.l.f. Beauty (ELF), eBay (EBAY), Evercore (EVR), Humana (HUM), McKesson (MCK), Meritage Homes (MTH), MetLife (MET), Novartis (NVS), Old Dominion (ODFL), Peloton Interactive (PTON), Thermo Fisher Scientific (TMO), Waste Management (WM)

Thursday: Apple (AAPL), Alibaba Group (BABA), Alphabet (GOOGL), (AMZN), Bristol-Myers Squibb (BMY), Canada Goose (GOOS), Cardinal Health (CAH), ConocoPhillips (COP), Eli Lilly (LLY), Estee Lauder (EL), Ferrari (RACE), Ford Motor (F), Gilead Sciences (GILD), GoPro (GPRO), Harley-Davidson (HOG), Hershey Foods (HSY), Honeywell (HON), Merck (MRK), MicroStrategy (MSTR), News Corp. (NWSA), Qualcomm (QCOM), Quest Diagnostics (DGX), Sirius XM (SIRI), Skechers (SKX), Starbucks (SBUX), Under Armour (UAA), World Wrestling Entertainment (WWE)

Friday: Aon (AON), Cboe Global Markets (CBOE), Cigna (CI), Regeneron Pharmaceuticals (REGN)