Investment and Options Strategist
Summary: Last week, major indices fluctuated significantly due to earnings reports, economic data, and political developments, with volatility peaking mid-week. This week, investors should brace for more market swings driven by key economic reports and earnings from tech giants.
Last week, the financial markets experienced significant fluctuations as major indices responded to a mix of earnings reports, economic data, and political developments. The volatility persisted throughout the week, reflecting investor uncertainty and cautious sentiment.
The major indices showed notable movements last week:
Volatility was on the rise for most of the week before declining on Friday:
Tesla (TSLA): Despite high sales volumes, Tesla's earnings showed squeezed profit margins, raising concerns about future profitability. Tesla reported earnings per share (EPS) of $0.52, missing the expected $0.61. Revenue was $25.5 billion, slightly above the expected $24.33 billion. Following the earnings report, Tesla's stock price dropped significantly, closing at $215.99, down 12.33% for the day.
Alphabet (GOOGL): Alphabet met analyst expectations but faced concerns over future advertising revenue. The company reported EPS of $1.89, meeting the expected $1.83, with revenue of $84.74 billion, slightly above the expected $84.16 billion. Despite meeting expectations, concerns about future advertising revenue led to a selloff in tech stocks. Alphabet's stock price fell by 5.04%, closing at $172.63 following the earnings announcement.
This week is expected to bring significant volatility, driven by a series of crucial economic reports and the Federal Reserve's upcoming meeting. Key economic events include:
The FOMC statement and the employment-related data are particularly important, as they will provide insights into the Federal Reserve's monetary policy direction and the health of the labor market, respectively.
In addition to the economic events, this week will feature earnings reports from several major companies, including:
The earnings from the "Magnificent 7" (MSFT, AAPL, AMZN, NVDA, TSLA, GOOGL, META) will be closely watched, as they have significant potential to impact market volatility and investor sentiment. Here's a closer look at the expected results and key focus areas for these companies:
Microsoft (MSFT): Reporting on July 30, 2024, Microsoft is projected to achieve $64.37 billion in revenue, a 14.6% year-over-year increase. The expected EPS is $2.93, up from $2.69 last year. Investors will focus on growth in the Azure cloud platform and updates on AI initiatives. (1)
Meta (META): Meta's earnings are scheduled for July 31, 2024, with revenue expected at $38.35 billion, marking a 20% increase year-over-year. The projected EPS is $4.71, significantly higher than $2.98 last year. Key areas of interest include advertising revenue growth and updates on AI initiatives, particularly the new Llama 3.1 model. (2)
Apple (AAPL): Apple will report on August 1, 2024. The company is projected to post $84.39 billion in revenue, a 3.1% year-over-year increase, and an EPS of $1.34, up from $1.26 last year. Investors will be keen on iPhone sales in China and updates related to AI. (3)
Amazon (AMZN): Also reporting on August 1, 2024, Amazon is expected to achieve $149 billion in revenue, driven by growth in retail and cloud services. The projected EPS is $1.02, up from $0.63 last year. Key focus areas will be the performance of Amazon Web Services (AWS) and the North American e-commerce segment. (4, 5)
This week, the financial markets are poised for heightened volatility due to a confluence of critical economic reports and significant corporate earnings. Last week saw major indices like the S&P 500 and Nasdaq 100 experiencing declines, while the Russell 2000 showed resilience. Volatility spiked mid-week but eased off by Friday.
Key economic events, including the FOMC statement and various employment-related reports, will be crucial in determining market direction. These reports will provide insights into the Federal Reserve's monetary policy and the health of the labor market, both of which are pivotal for investor sentiment.
The earnings reports from major companies, particularly the "Magnificent 7," will also play a significant role in shaping market volatility. Investors will be closely monitoring the performance of tech giants like Microsoft, Meta, Apple, and Amazon, as their results and guidance will have substantial impacts on market dynamics.
In summary, with a mix of high-stakes earnings reports and pivotal economic data, investors should brace for potential market swings. Staying informed and prepared for volatility will be key strategies for navigating the week ahead.
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