(News Bulletin 247) – The New York Stock Exchange is expected to tread water on Monday morning, in a sluggish market where caution dominates at the start of the busiest week of the earnings season.
Half an hour before the open, futures on major New York indices are trading around breakeven or moderate losses, suggesting an opening on an irregular note.
Investors are bracing for a busy week with a flurry of earnings in the tech sector, interspersed with several indicators including the initial estimate of first-quarter GDP.
The publications of the heavyweights Alphabet, Microsoft, Meta and Amazon will be particularly scrutinized, while investors are asking more and more questions about the health of the American economy.
“A recession is very clearly materializing based on the bout of weakness that currently characterizes the markets for semiconductors, automotive, telecom equipment and corporate technology spending,” warns an analyst this morning.
Knowing that Alphabet, Microsoft, Meta and Amazon together represent nearly 14% of the S&P 500 and a quarter of the Nasdaq Composite, any surprise, one way or the other, could have a strong impact on the trend.
In general, the week promises to be the busiest of the earnings season in the United States with a total of 180 components of the S&P 500, including 14 of the Dow Jones index, due to publish their figures.
Of companies that have already reported, 76% posted earnings above analysts’ expectations, according to FactSet, compared to a five-year average of 77%.
The week will also be marked by the release on Thursday of the first estimate of US growth for the first three months of the year.
The consensus expects the world’s largest economy to grow by 2% at an annualized rate over the first three months of 2023, compared to +2.6% in the fourth quarter of 2022.
‘The strength of the labor market, the high level of corporate profitability, the absence of over-indebtedness of households may suggest that a recession is avoidable, but the recessionary risk has certainly risen in recent weeks’, warn economists of Oddo BHF.
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