One: Apple’s Earnings
iPhone manufacturer Apple (AAPL) will release their quarterly earnings on Thursday after the market closes.
Analysts have been all over the place on their expectations for the results, but one thing is clear… Wall Street is looking for something to change quickly.
One analyst appears to be happy with Apple as we head into the report. This morning, Bernstein upgraded shares of Apple to “Strong Buy” only three days before their report.
This is a little strange, as the same analyst reiterated their “buy” recommendation on the stock last week. Do you think he knows something?
Here’s the thing: Apple is in a bad spot when it comes to the development of new products that will move the needle.
Amazon (AMZN), Alphabet (GOOGL), and a number of other companies have been making critical investments into AI that are now starting to benefit their stocks and investors. Apple needs to do the same.
That’s what we discuss in my latest Apple deep dive you can check out right here.
Two: Amazon’s Earnings
Amazon is set to announce their quarterly results after the close on Tuesday afternoon. The company will be the fifth of the Magnificent Seven stocks to provide their results to The Street this earnings season.
Last week, Alphabet saved the day, delivering strong results and outlook from their AI investments. That raised the bar for Amazon shares ahead of the report.
Shares of Amazon have averaged returns of 7.6% in the two weeks following its earnings announcements over the last year.
We saw exaggerated selling of Amazon stock last Thursday as it appears the market was spooked by Meta (META)’s results. Shares are finding support at their key 50-day moving average, which is also bullish.
It is important to note that there has been some weakness in Amazon shares that correlated with weakness in the retail sector. This is likely due to weakening retail sales data that suggests that you and I are pulling back on discretionary spending.
Expect this to be a point that investors watch closely in Tuesday’s report.
Three: Federal Market Open Committee Interest Rate Decision
Jerome Powell and the other Fed Presidents will release their interest rate decision on Wednesday at 2 pm ET. The Fed is expected to hold rates steady, which shouldn’t be a disappointment for investors… this time.
Investors have spent the last two months figuring out that the Fed won’t drop rates until later in the summer as signs of inflation have been resilient over the last four weeks. The Fed has a big job on their hands this week in curbing the market’s appetite for lower rates without crashing the market.
We’ve dropped from the market expecting six interest rate cuts in 2024 to just three now.
Expect to hear a lot of questions about stagflation at Chairman Powell’s press conference after Jamie Dimon’s forecast last week.
Four: April Jobs Report
We’ll see the jobs report hit the tape on Friday.
While this is one of the larger headlines events of the week, stocks will have already set their course ahead of the report as the interest rate decision offers the largest risk/reward event for investors on Wednesday.
Economists will be looking closely at the earnings portion of the report as we’re seeing the hourly earnings move above 4.1%. The increases in hourly wages has concerned some analysts, as it suggests that the market could face another wave of inflation pressure.
Bottom Line
From my perspective, the Fed is likely to set the tone for the next few weeks as investors begin to worry more about the Fed’s “higher for longer” scenario that may provide too much of a headwind for stocks as we head into the well-known “Sell in May” seasonality.
Sidenote: I’ll talk about “Sell in May” on Wednesday. Don’t touch that “Sell” button until then.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.