Market Ready To Move On Some Big Reports

The first quarter earnings reporting period will go into hyperdrive this week, which is partly why things are starting today at a slow pace. There were a handful of companies that reported their results this morning, including Dow component Coca-Cola (KO), but the real rush of reporting starts Tuesday.

Dow components 3M (MMM), Dow, Inc. (DOW), McDonald’s (MCD), and Verizon (VZ) report before Tuesday’s open and will cede the reporting spotlight to Alphabet (GOOG), Microsoft (MSFT), Texas Instruments (TXN), and Visa (V) after Tuesday’s close.

Alphabet and Microsoft in particular promise to hold some market-moving sway with their reports and guidance, and will soon be joined in that respect by Meta Platforms (META), which reports after Wednesday’s close, and Amazon.com (AMZN), which reports after Thursday’s close.

This week, however, won’t be defined only by the earnings reporting. A batch of important economic data that includes April Consumer Confidence (Tuesday), March New Home Sales (Tuesday), March Durable Goods Orders (Wednesday), the Advance Q1 GDP estimate (Thursday), Weekly Initial Jobless Claims (Thursday), the Q1 Employment Cost Index (Friday), and the March Personal Income and Spending Report (Friday), will also factor into the week’s trading action.

To be sure, there hasn’t been much “trading action” of late in the market. The S&P 500 starts today at 4,133.52, virtually unchanged from its intraday high on April 4 (4,133.13).

The trading action has been missing in action at the index level, partly because market participants have been anxiously awaiting this week and what is heard from the mega-cap companies, which have led the market’s advance this year.

That wait-and-see disposition is on display again this morning. Currently, the S&P 500 futures are down one point and are trading in-line with fair value, the Nasdaq 100 futures are up three points and are trading fractionally above fair value, and the Dow Jones Industrial Average futures are down 31 points and are trading 0.1% below fair value.

Coca-Cola is up 1.7% following its earnings report, demonstrating how the action continues to take place at the individual stock level. The “market” itself is stuck, but with Alphabet, Microsoft, Meta Platforms, and Amazon.com accounting for $5.12 trillion of market capitalization combined, and Reuters reporting that hedge funds have their biggest net short position in S&P 500 index futures since October 2011, things seem destined to get unstuck this week.

Tucked in between all the earnings and economic reporting will be debt ceiling dealings. The House will reportedly vote on a GOP bill this week that calls for raising the debt ceiling and agreeing to spending reductions. That is expected to be a close vote, but, in any case, it is being labeled dead on arrival in the Senate because it requires spending reductions in exchange for raising the debt ceiling.

Both sides continue to say they won’t let the U.S. default on its debt, but there is an uneasy sense in the market that this matter is going to have its share of drama before something gets done.

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Originally Posted April 24, 2023 – Market ready to move on some big reports