In the world of finance, things can change quickly and often unpredictably. Investors are always keeping an eye on the market and the various factors that influence it. This week is no different, as several key events are set to take place that could significantly impact the financial markets.
Here’s a rundown of what to expect:
Table of Contents
- Tesla’s Spending Plans Weigh on Consumer Discretionary Stocks
- Tech Giants Report Earnings
- Make or Break Week for Tech Stocks
- Strong Earnings Season for Big Banks
- Key Economic Data Scheduled for Release
- Fed Policymakers Acknowledge Inflation Concerns
- U.S. Treasury Yields Ease, but Investors Remain Concerned about U.S. Debt Ceiling
- Market Update
Tesla’s Spending Plans Weigh on Consumer Discretionary Stocks
Shares of Tesla fell 3.4% on Monday after the company raised its capital expenditure forecast for 2023. The move is part of the automaker’s plan to ramp up its output, but it had a negative impact on consumer discretionary stocks, which are part of the S&P 500 index. This news led to the Nasdaq index leading the losses on Wall Street.
Tech Giants Report Earnings
This week, four tech giants are scheduled to report their results: Alphabet, Microsoft, Amazon, and Meta Platforms. These companies represent more than 14% of the value of the benchmark S&P 500 index. A rally in these stocks has supported Wall Street this year, and investors are waiting to see if the gains can continue amid a gloomy economic outlook.
Make or Break Week for Tech Stocks
According to Peter Cardillo, the chief market economist at Spartan Capital Securities in New York, it’s a make-or-break week for tech stocks. If the earnings from these tech giants don’t disappoint, then the market can continue to rally.
Strong Earnings Season for Big Banks
The earnings season for big banks has started, and the results have been stronger than expected, allaying concerns about contagion from the banking crisis in March. According to Refinitiv IBES data, nearly 77% of the S&P 500 companies that have reported their first-quarter results have beaten analysts’ profit estimates. The long-term average beat rate stands at 66%. Analysts are expecting a quarterly profit contraction of 4.7% versus a 5.1% decline estimated at the start of April.
Key Economic Data Scheduled for Release
This week, we can expect to see early readings of first-quarter U.S. GDP, personal consumer expenditure index (PCE) for March, and consumer confidence numbers for April. These data points could have an impact on the financial markets.
Fed Policymakers Acknowledge Inflation Concerns
Most Fed policymakers over the past week have acknowledged the central bank has more work to do on bringing down inflation. This news has led to money market traders pricing in a 92% chance of a 25-basis-point rate hike by the Fed in May, as per CME Group’s Fedwatch tool.
U.S. Treasury Yields Ease, but Investors Remain Concerned about U.S. Debt Ceiling
U.S. Treasury yields eased following recent signs of slowing inflation and economic activity. However, investors remain increasingly concerned about a potential standoff over the U.S. debt ceiling. U.S. House of Representatives Speaker Kevin McCarthy said the House would vote on his spending and debt bill this week amid lingering concerns that the U.S. government could hit its debt ceiling sooner than expected.