us stocks

US stocks continued their good run last week and the Nasdaq closed with gains for the fourth straight week. The next week looks quite crucial as many Big Tech companies would release their earnings and we also have the all-important Fed meeting.

Looking back to the last week, the Nasdaq Composite jumped 4.32%. The S&P 500 added almost 2.5% and the 30-share Dow Jones Industrial Average rose 1.8%. Many companies released their earnings last week.

Microsoft beat earnings estimates in the December quarter but provided tepid guidance. Intel was another key earnings last week. The company’s earnings were horrible, to say the least, and the stock slumped on Friday.

The chip giant not only missed topline and bottomline estimates for Q4 2022 but its guidance for the first quarter was also way below estimates.

Tesla meanwhile beat on both revenues and profits. The stock jumped after the earnings release and overall added more than 33% in the week. It was the best week since May 2013 for the Elon Musk-run company. There is a guide on buying Tesla stock.

Four FAANGs to Release Their Earnings Next Week

Next week, Apple, Alphabet, Amazon, and Meta Platforms would release their earnings. The earnings season for FAANGs started on a positive note and Netflix surprised markets on the upside with its Q4 2022 subscriber numbers.

Incidentally, all the FAANG stocks underperformed the S&P 500 last year and only Apple could manage to beat the Nasdaq Composite. Apple is the largest holding for Berkshire Hathaway and its chairman Warren Buffett has praised the iPhone maker multiple times. There is a guide to buying Apple stock.

Coming back to next week’s earnings, apart from FAANGs also we have several other notable earnings. AMD would release its earnings on Tuesday. The company’s earnings would come amid the slump in chipmaker stocks over the last year.

Ford and General Motors would also release their earnings next week. Automakers have also crashed amid fears of a slowdown in demand. During Ford and General Motors’ earnings release, markets would also closely watch the commentary on their EV (electric vehicle) business.

Ford might also comment on reports that it intends to sell its plant in Germany to China’s BYD Motors.

Watch Out for Chinese EV Stocks Next Week

Next week, Chinese EV stocks might also remain in focus as they release their January delivery reports. Chinese EV stocks have rebounded amid the reopening in China. NIO, Xpeng, and Li Auto had incidentally impressed markets with their December deliveries.

During Tesla’s Q4 2022 earnings call, Musk said that a Chinese company could rival Tesla in the future. Musk’s praise and Tesla’s Q4 2022 earnings beat helped support a rally in Chinese EV stocks.

Recently, Baillie Gifford also increased his stake in NIO. Many analysts see NIO as a worthy competitor to Tesla. There is a guide on buying NIO stock.

US Stocks Could React to Fed’s Meeting Next Week

The Fed’s next meeting, the first for 2023, would begin on January 31 and conclude on Feb 1. Traders are now putting an almost 100% probability of a 25-basis point rate hike at the meeting.

Many Fed officials including Governor Christopher Waller have backed calls for a 25-basis point rate hike at the next meeting. US stocks could react to Fed’s meeting next week.

US GDP grew at an annualized pace of 2.9% in the fourth quarter of 2022 which was better than expected. The world’s largest economy registered a growth of 2.1% last year which looks decent considering the multiple headwinds including high inflation and multi-year high interest rates.

Former Treasury Secretary Larry Summers has warned Central Banks against lowering the guard against inflation. His views are in contrast to some of the other economists who believe that the Fed should pause its rate hikes.

Along with the Fed’s rate hike decision, chairman Jerome Powell’s commentary on future rate hikes could also keep stock markets on their feet next week.

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