Earnings Season Continues – “Big 5” Report Over the Next 72 hours

Stock investors await big tech earnings. The so-called “Big 5” tech companies – Alphabet (Google), Amazon, Apple, Meta (Facebook), and Microsoft – which account for nearly 25% of the S&P 500‘s total market value, all report over the next 72 hours.

Big 5” in Details

Alphabet and Microsoft kick things off after markets close today, followed by Meta on Wednesday, and Apple and Amazon on Thursday. The results are viewed not only as a gauge of the wider technology industry’s health, but also the overall economy as these companies touch nearly every corner of American business and consumer life.

Growth for the “Big 5” is expected to have slowed to just under +10%, compared to +55% profit growth in full-year 2021 when revenue for these behemoths topped a record $1.4 trillion.

With the stocks of these 5 companies down by double-digits for the year already, many bulls think there is potential for a strong rally if they can deliver better-than-expected results.

Importantly, investors are looking for signals that lingering pandemic supply chain snags are mostly in the rear view, which would be positive for both corporate margins as well as the Fed’s inflation fight. The really big concern, however, is how they are handling their outsized US dollar exposure. This could be a tough headwind as these multinationals face serious exposure to the strength in the US dollar.

Data to Watch

Earnings are also due today from 3M, ADM, Biogen, Chipotle, Coca-Cola, General Electric, General Motors, Raytheon, UPS, Valero, and Visa.

On the economic data front, home prices take center stage with the FHFA House Price Index and the Case-Shiller National Home Price Index, both for September.

For what it’s worth, the S&P CoreLogic Case-Shiller Index for August registered the first month-over-month decline since January 2019. While prices in the 20-city index fell by -0.8%, year-over-year home prices are still up more than +14%.

Investors may also be monitoring the Ukraine situation a bit more closely in the days ahead. Russia has been warning that Ukraine is going to deploy a so-called “dirty bomb” – a bomb that combines radioactive material with conventional explosives – in its own territory. Ukraine as well as Western officials have rejected the accusation, but some are worried that Russia is making the claim as a pretext for escalating the war.

Other military officials think it is just a scare tactic, with Russia hoping that the West’s support of Ukraine will weaken under the threat of global nuclear war.

Something else worth keeping an eye on is the 10-year Treasury yield posting a new multi-year high yesterday at 4.25%… money continues to circulate and certainly has some alternatives it hasn’t had in many years.