On Wall Street, a week of reports of the largest US companies and a Fed meeting is expected



Tesla, Google, Microsoft, Facebook, Apple and others will report their quarterly results this week. The reporting season is going well, but there are concerns that expectations may be overestimated. The Fed meeting will be held on Tuesday and Wednesday, following which decisions on US monetary policy will be announced.

The reporting season continues this week with the participation of the largest US companies. Here’s what investors can expect this week:

The Federal Open Market Committee (FOMC) will meet in April on Tuesday and Wednesday.

  • Wednesday before market opening: Boeing (BA).

  • Wednesday after market close: Apple (AAPL), Facebook (FB), eBay (EBAY), Ford (F), Qualcomm (QCOM), ServiceNow (NOW), Teladoc (TDOC), GrubHub (GRUB) and others.

  • Thursday before market opening: Caterpillar (CAT), Comcast (CMCSA), Merck (MRK), Altria Group (MO), McDonald’s (MCD) and Mastercard (MA).

  • Thursday after market close: Amazon (AMZN), Twitter (TWTR) and Gilead Sciences (GILD).

  • Friday: Colgate-Palmolive (CL), Chevron (CVX) and Exxon Mobil (XOM).

According to an analysis by Credit Suisse’s Jonathan Golub, companies, which account for just over a quarter of the S&P 500’s market capitalization, were reporting their first quarter results as of the end of last week.

83% of companies reporting results posted better-than-expected earnings, with a combined 23.1% better than expected.

By contrast, the Netflix (NFLX) report was a flop as strong growth in demand for streaming services during the pandemic was followed by a slump as quarantine restrictions were largely lifted and half of US adults received at least one COVID vaccine. nineteen.

Netflix’s failed report could be repeated for other big tech companies as they face a contrasting comparison with the first quarter of 2020, when the first cases of coronavirus were confirmed in the US in March.

However, Wall Street’s forecasts are mostly bullish.

For Amazon’s upcoming first quarter report, analysts expect revenue to grow 39% year-over-year. Strong e-commerce trends should continue thanks to two rounds of federal stimulus, including $ 1,400 in aid payments to most Americans during the pandemic.

Quarterly reports from Facebook and Alphabet should also be strong, experts say, as these companies get the lion’s share of their ad revenue. With the economic recovery, restaurant openings, resumption of air travel, and more, advertisers are starting to spend more, which should lead to higher revenues and profits.

In addition, small social networking company Snap (SNAP) last week reported 66% growth in first-quarter sales and another spike in user growth of 22%, despite many quarantine restrictions being lifted in March.

Analysts predict that Facebook’s revenue in the first quarter will grow 34%, if this forecast is met – it will be the fastest growth since the beginning of 2018.

Alphabet, according to upbeat Wall Street estimates, will report revenue growth of 26%, the fastest pace since early 2013.

“We think the GOOG bar will be higher this quarter than several previous ones as strong searches and ad recovery from brands are expected,” wrote BMO Capital Markets analyst Daniel Salmon, citing advertising in such “key categories”. like travel and YouTube streaming service.

As for the upcoming Apple report, analysts expect strong results from sales of the new iPhone 12 with 5G and streaming services. At the same time, more attention will be focused on Apple’s forecasts for the second quarter, as many are concerned about the global shortage of chips, which could affect the company’s future earnings.

Regarding the upcoming meeting of the Federal Open Market Committee (FOMC) of the FRS, market experts do not expect serious updates, as Chairman Jerome Powell assured that the central bank will adhere to a policy of low rates and stimulating economic growth for a long time to come.

Despite mass vaccinations, the pandemic is still unpredictable due to the emergence of new stamps of COVID-19 and statements by Pfizer (PFE) executives and others about the potential need to vaccinate against coronavirus annually, as people can get sick again due to virus mutations. …

At the same time, many economists point out that the US economy is recovering at a faster pace than the Fed expected, and this may prompt officials to ease support and cut back on corporate bond buyback programs.

The central bank is currently implementing a $ 120 billion monthly asset purchase program.

The latest government economic data is encouraging: U.S. retail sales jumped nearly 10% in March, the highest growth since May 2020, and initial jobless claims have fallen to lows since the pandemic began in the past two weeks.

Michelle Meyer, chief economist at Bank of America, believes that “at the conclusion of the April meeting, Chairman Powell and the FOMC will provide a more positive outlook on the economy, but reiterate that the economy must make further progress before the central bank makes any policy changes. because the risks associated with the virus persist. ”

“The post-meeting press conference will likely emphasize that the recent acceleration in inflation should be temporary and the labor market recovery is far from over,” Bank of America said.

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