ZINGER KEY POINTS
- The Magnificent Seven face a crucial test as four mega-cap tech giants report quarterly earnings this week.
- Analysts question whether tech stocks have pulled back enough for investor stepping in again.
The elite group known as the Magnificent Seven faces a decisive market test as four mega-cap tech giants report their latest quarterly earnings this week.
Microsoft Corp. will kick things off on Tuesday, reporting its fiscal fourth-quarter 2024 earnings after market close.
Meta Platforms Inc. will take the spotlight after the market closes on Wednesday, potentially making for a volatile day as traders assess interest rate moves following the Federal Reserve policy meeting and Fed Chair Jerome Powell‘s press conference.
Amazon.com Inc. and Apple Inc. will both report their fiscal second-quarter and third-quarter earnings, respectively, on Thursday, after market close.
Collectively, these four giants have a market valuation of nearly $10 trillion, highlighting the significant impact these earnings are expected to have on the markets.
Last week, the Roundhill Magnificent Seven ETF suffered its worst day since the fund’s inception, tumbling over 6% on Wednesday. On the same day, both the S&P 500 and the Nasdaq 100 indices had their worst session since late 2022. Magnificent Seven also marked their third consecutive week of declines.
What Analysts Expect
“Much depends on investor sentiment,” said David Morrison, senior market analyst at Trade Nation.
According to Morrison, the key questions to address are whether the tech sector has pulled back enough for investors to buy again, regardless of earnings. Additionally, if there are further disappointments, will it trigger another wave of selling, and will funds then shift towards smaller-cap stocks?
“There’s a lot to consider, and that’s before factoring in monetary policy meetings from the Federal Reserve, Bank of Japan, and Bank of England, along with the U.S. Non-Farm Payrolls on Friday. This may prove to be a decisive week ahead of the summer’s main holiday month,” he added.
Goldman Sachs Predicts Positive Amazon Performance Ahead of Earnings
Goldman Sachs equity analyst Eric Sheridan highlighted three key debates for investors ahead of Amazon’s earnings this week.
First, he pointed to the health of the consumer, with Amazon’s eCommerce business remaining strong in Q2 despite some weakness in the UK and Germany.
Second, Sheridan observed Amazon’s potential to boost operating income margins, with expected outperformance driven by higher retail margins, increased advertising contributions, and robust AWS profitability.
Third, he addressed the growth trajectory of AWS revenue, anticipating a reacceleration in 2024 as optimization and workload migration challenges turn into tailwinds, alongside rising AI workloads.
Goldman Sachs raised Amazon’s 12-month price target, reiterating a Buy rating.
—
Originally Posted July 30, 2024 – Magnificent 7 Face Pivotal Market Moment As 4 Mega Tech Giants Report Earnings This Week
Disclosure: Benzinga
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Benzinga and is being posted with its permission. The views expressed in this material are solely those of the author and/or Benzinga and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Disclosure: ETFs
Any discussion or mention of an ETF is not to be construed as recommendation, promotion or solicitation. All investors should review and consider associated investment risks, charges and expenses of the investment company or fund prior to investing. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Join The Conversation
If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.