Wall Street Week Ahead: Tech Giants Revenue Could Be Another Test for Markets New Highs

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FILE PHOTO: People are seen on Wall Street outside the New York Stock Exchange (NYSE) in New York City, USA March 19, 2021. Reuters / BrendanMcDermid / File photo

October 22, 2021

luis klaskov

NEW YORK (Reuters) – Investors are paying attention to massive revenue reports from Wall Street technology and Internet giants. High-growth stocks, which have been driving the market for years, are facing pressure from regulations, supply chain disruptions and rising Treasury yields. ..

Apple Inc, Microsoft Corp, Google’s parent company Alphabet Inc, Amazon.com Inc and Facebook Inc will all report revenue next week. In short, these five names make up more than 22% of the weight of the S&P 500, and equity movements have a significant impact on the broader index.

Overall, companies that account for 46% of the S&P 500’s market cap will announce their quarterly results next week, according to Goldman Sachs.

A strong earnings report has helped propel the S&P 500 to record highs, with the benchmark index up 5.5% so far in October. The index recorded the biggest monthly fall in September since the pandemic began in March 2020.

Investors expect most big tech companies to show strong profits, but many are also hearing signs of whether they can sustain their growth. It will also focus on forecasting supply constraints such as chip shortages affecting a wide range of industries around the world and considering how sustainable the recent rise in consumer prices is.

There were already some indications that tech companies may have higher standards to articulate. Intel and IBM fell after disappointing reports this week.

Meanwhile, Facebook’s stock fell 5 percent on Friday. That’s because Snap Inc., owner of the photo-messaging app Snapchat, said the privacy changes implemented by Apple on iOS devices will reduce its ability to target and measure digital ads.

James Lagan, director of wealth management research at DA Davidson, said: “Some of these big companies may be a little disappointed.”

MegaCap’s Quarterly Report Next Week https://graphics.reuters.com/USA-STOCKS/TECH/klpykzlgypg/chart.png

Market gains this month are driven by sectors that are particularly sensitive to economic volatility, including energy and finance, rising 11% and 8%, respectively. The S&P 500 technology sector is up 6% monthly.

Many technology-focused companies have been fueled by a pandemic as consumer behavior changes as the economy stagnates and shifts to telecommunications.

“The question is whether they can sustain it,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. “What is the growth rate of mass technology?”

According to a BofA Global Research study earlier this month, fund managers underestimated technology slightly compared to their average position over the past two decades. Also, he named “Long Take” as the busiest deal on the market for four consecutive months.

Supply chain issues, including a shortage of semiconductors, will certainly be a hot topic for iPhone maker Apple, but Amazon opens a window into how the holiday shopping season could be affected by logistics constraints. can be given.

“If … Apple says, ‘Yeah, I’d sell more phones except for the lack of chips,’ you think it’s really hard, because they probably want to get chips from someone. That’s because they are lined up first,” said President Peter Tuse. Pursue an investment advisor.

Investors are all eager for insight, as the prospects for regulatory intervention from the US government also hinge on these megacorporations.

This week, the US consumer watchdog said it has requested information from several major tech companies on how they collect and use consumer payment data.

Continued increases in Treasury yields, which are inversely proportional to bond prices, can also pose a long-term threat to technology and other growth stocks. Valuation of these companies depends on future cash flows. Future cash flows would be significantly discounted in the Standard Model if yields increase. The yield on 10-year government bonds rose nearly 35 basis points to 1.64 per cent last month.

Art Hogan, chief market strategist at National Securities, said: “So far, the good news has won the tug-of-war with the bad, but we have a long, potentially bumpy road ahead of us.”

(Reporting by Lewis Kraskoff, New York, Edited by Ira Iosbashvili and Matthew Lewis)

Wall Street Week Ahead: Tech Giants Revenue Could Be Another Test for Markets New Highs

Source Link Wall Street Week Ahead: Tech Giants Revenue Could Be Another Test for Markets New Highs

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