Over the past two weeks, investors have been confused by earnings, economic data and the latest policy announcements from the Federal Reserve.
This week's economic calendar will be the quietest of the year, with revenue streams remaining steady but slowing over the coming week.
Investors on Friday welcomed April jobs data that showed the pace of growth in the U.S. labor market slowed last month and renewed prospects for the Federal Reserve to cut interest rates this year.
This report, combined with Apple's (AAPL) strong financial results released late Thursday, makes it the latest Big Tech company to beef up its shareholder return plans, with all three major indexes ending the week in positive territory.
For the first time in three weeks, the expected earnings for the coming week will not include members of the Magnificent Seven. Instead, consumer and entertainment names end up getting the highest bill.
Disney (DIS) results are scheduled to be released before the bell Tuesday morning, when the media conglomerate is scheduled to report its first quarterly results since winning its proxy battle with Nelson Peltz last month. This should make this the most interesting report of the week. Disney's outlook for streaming service subscriber growth, park attendance and summer box office revenue will be key themes for investors.
As the parent company of ESPN, comments on the state of sports media, particularly the ongoing negotiations for the NBA's next media rights deal, will also be closely watched. Earnings later this week from Warner Bros. Discovery (WBD), the parent company of cable networks HBO, TBS and TNT, should pique investors' interest along the same lines.
On the earnings side, Uber (UBER) and Lyft (LYFT) provided updates on their ride-sharing businesses, Reddit (RDDT) reported its first quarterly results since going public, and consumers' eating and drinking habits were examined through survey results. It is scheduled to be done. Cheesecake Factory (CAKE), Papa John's (PZZA), Celsius (CELH), and Krispy Kreme (DNUT).
There is little to note for investors on this economic calendar, with the only report of note being a preliminary report on consumer sentiment released by the University of Michigan on Friday. Several Fed officials are scheduled to speak publicly next week, but Fed Chairman Jerome Powell will not be among them.
find a better balance
No other news story had a bigger impact on the market last week than Friday's jobs report.
The U.S. economy added 175,000 nonfarm payrolls in April, less than expected.The unemployment rate also rose by one-tenth. Annual wage growth slowed to 3.9%, the lowest level since June 2021.
Slower job growth and seemingly easing wage pressures after the start of the run-up to 2024 could be enough for investors to price in a Fed rate cut as early as September. was.
“The labor market remains healthy and the Fed needs to see several months of positive inflation data before cutting rates,” said Nancy Vanden Houten, chief U.S. economist at Oxford Economics.
“However, the April jobs report will help Fed officials regain confidence that inflation can return to 2%.”
“While the labor market remains relatively tight, the balance between supply and demand is becoming better,” Fed Chairman Jerome Powell said at a press conference last week. Friday's report will confirm this view of the Chair.
Still, the soft jobs report, which eases pressure on the Fed, should not be mistaken as a sign that the U.S. labor market is improving.
Rick Rieder, BlackRock's chief investment officer for global fixed income, said in a note Friday that the stability of the U.S. labor market last year was “remarkable,” with three-month, six-month and 12-month average payrolls totaling He said the number of people increased by 242,000. , 242,000 and 245,000 respectively.
Although Rieder expects the pace of job growth to slow, “some of the most frequent indicators of labor market health, such as job turnover and the number of new applications, have remained at low levels since March. “This suggests there is little sign of mass layoffs,” he added. And a relatively healthy labor market. ”
If the first quarter of 2024 is defined by investors agreeing to the idea that rate cuts may be completely off the table, then the first month of the second quarter will see interest rates It's a more positive time for investors looking for a pullback.
Earnings excitement
Thus, the first quarter earnings season is almost over.
By Friday, about 80% of the S&P 500 had reported results, with annual profit growth totaling 5%. At the end of the first quarter, investors had expected profits to rise 3.4% from a year earlier, according to FactSet data.
And not only has this earnings season exceeded investors' expectations, but the typical pattern of analysts being cautious ahead of next quarter's earnings season has not been maintained.
Analysts raised their April profit estimates by 0.7%, according to FactSet. Typically, analysts lower their estimates by an average of 1.9% in the first month of a given quarter.
Of course, companies are happy to embrace analysts' habit of lowering estimates mid-quarter, making “beating” the bottom line a more manageable task.
And given that both companies and analysts are aware of the dynamics of this dance, the fact that analysts haven't lowered their estimates tells a positive fundamental story that supports the market's rally this year. .
Let's take Apple as an example.
On Friday, the iPhone maker's stock rose 6%. Second-quarter results released Thursday were better than feared. And although the company further reported a decline in annual sales, this quarter, Apple expects sales to increase in his low single digits.
And even more encouraging for investors, CFO Luca Maestri told Yahoo Finance's Josh Lipton that sales in mainland China actually increased in the most recent quarter.
The investor community is concerned about Apple's high position in China, and there is also some alternative data that suggests Apple's prospects in Asia are poor, and Apple has been criticized by analysts for I was asked how to adjust the numbers.
“We can't act on data points,” CEO Tim Cook told investors. “I [can] We only need to mention what our results will be… we can't bridge to numbers we didn't come up with. ”
A sharp and honest assessment of how Apple views external efforts to track its business.
And you'll only hear this type of message in an environment where companies are bold enough to understand the difference between their numbers and external estimates.
Therefore, we will continue to see an environment in which analysts do not disappoint expectations as quickly as usual.
weekly calendar
Monday
Revenue: Palantir (PLTR), Spirit Airlines (SAVE), Tyson (TSN), BioNTech (BNTX), Williams (WMB), Goodyear Tire (GT), Simon Property Group (SPG), Vertex (VRTX), Fidelity National (FIS), Air Lease (AL), Aarons (AAN), Lucid (LCID), Coty (COTY), Hims & Hers (HIMS)
Economic news: There is no notable economic news.
Tuesday
Revenue: Disney (DIS), Lyft (LYFT), Reddit (RDDT), Match Group (MTCH), Twilio (TWLO), Coupang (CPNG), Kenvue (KVUE), TransDigm (TDG), TripAdvisor (TRIP), Rockwell Automation (ROK) ), Ferrari (RACE), Crocs (CROX), BP (BP), Data Dog (DDOG), Celsius (CELH), Rivian (RIVN), Electronic Arts (EA), IAC (IAC)
Economic news: There is no notable economic news.
Wednesday
Revenue: Uber (UBER), Toyota (TM), AB InBev (BUD), Airbnb (ABNB), Arm Holdings (ARM), Fox (FOXA), New York Times (NYT), Icahn Enterprises (IEP), Hine Celestial ( HAIN), Wolverine Worldwide (WWW), Robinhood (HOOD), Instacart (CART), Bumble (BMBL), Cheesecake Factory (CAKE), AMC (AMC), Beyond Meat (BYND)
Economic news: MBA Home Loan Applications, May 3 (previously down 2.3%)
Thursday
Revenue: Roblox (RBLX), Unity (U), Warner Bros. Discovery (WBD), Tapestry (TPR), Akama (AKAM), Dropbox (DBX), Planet Fitness (PLNT), Papa John's (PZZA), YETI (YETI), Warby Parker (WRBY), Endeavor (EDR), Constellation Energy (CEG), Yelp (YELP)
Economic news: Wholesale trade inventory, confirmed value for March (forecast -0.4%, previous -0.4%), number of new unemployment insurance applications, May 4 (previously 208,000)
Friday
Revenue: Enbridge (ENB), Honda (HMC), AMC Networks (AMCX), Soho House (SHCO), Digital Ocean (DOCN), Hawaiian Electric (HE)
Economic news: University of Michigan Consumer Sentiment, preliminary figures for May (expected 77, previous 77.2). University of Michigan's 1-year inflation expectations (previously 3.2%)
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