An inconsistent crop of earnings from some of Wall Street’s biggest firms could cloud the outlook for investors hoping to buy undervalued stocks in the face of a violent stock market selloff.
In a week – still in progress – loaded with corporate balance sheets, Alphabet, parent of Google, reported first-quarter revenue below expectations on Tuesday (26), while Microsoft projected double-digit revenue growth for the next year. Supervisor.
While most of the earnings season is to come, some investors fear that only stellar earnings by the Wall Street giants will contain a slump in equity markets. The S&P 500 was down 12.4% through Tuesday.
Also on Tuesday, the Nasdaq hit its lowest closing level since December 2020, losing nearly 4% in the session and falling 22% below its all-time high reached less than six months ago on Nov.
On Wednesday (27), the S&P 500 and Nasdaq rose 0.5% each, around 11:40 am (Brasilia time).
“There’s a lot of anxiety ahead of the results because if they don’t hold up, then there’s nothing left to hold the market back,” said Thomas Hayes, president of Great Hill Capital in New York.
Despite mixed results from big “growth” names, a category that encompasses tech companies, the balance sheets of companies that make up the S&P 500 beat analysts’ projections. Overall, about 81% of companies published figures above estimates.
First-quarter earnings are now expected to rise 8.2% from a year earlier, up from an estimated 6.4% in early April, according to Refinitiv data Tuesday morning.
However, there were some high-profile disappointments, including Netflix, whose stock plummeted after the results.
“Expectations for (growth companies) are very, very high, and if you don’t meet expectations you will see Netflix or Google go down,” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago. “It’s not something industry specific, it’s more specific to (each) company.”
Microsoft shares were up about 5.3% on Wednesday, while Alphabet’s were down about 3.8%.
Markets could receive further shocks this week as other results are released, including from Apple and Amazon.com. Meta Platforms, which owns Facebook, is expected to release its numbers after the close on Wednesday.
With just a few days left in the month, the S&P 500 is down 7.8% in April so far, which would be the biggest monthly percentage drop since March 2020.
Even so, there may be some reason for optimism in the last days of April. According to the Bespoke Investment Group, in the 39 months since 1980 that the S&P 500 has dropped at least 5% with three trading sessions remaining at the end of the month, the index has averaged a 1.51% gain in the remaining sessions.
“Usually, the last three trading days of these bad months offer some relief to investors,” Bespoke said in a note.
Source: CNN Brasil
I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
