The first quarter earnings season started with a bang last week as banks reported a solid set of numbers. Here are the key indicators and earnings that investors would watch next week.
Looking back at the last week, we had a flurry of earnings as well as economic indicators. Data released last week showed that the CPI rose at an annualized pace of 5% in March which is the lowest in almost two years – and came in below the 5.2% that analysts expected.
US retail sales fell 1% in March which was twice as much as what the markets expected. Previously, the job market also showed signs of cooling off as the March nonfarm payroll data was slightly below estimates.
Last week the Fed released the minutes of its March meeting – where it had raised rates by 25 basis points.
FOMC members were worried about the banking crisis and if not for the contagion fears, some members advocated a 50-basis point rate hike to tame inflation.
The minutes said, “Given their assessment of the potential economic effects of the recent banking-sector developments, the staff’s projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years.”
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There were several developments in the EV (electric vehicle) space also. Lucid Motors said that it produced only 2,314 cars in the first quarter and delivered 1,406. The stock crashed after the delivery report as the deliveries fell short of street estimates.
Key Events Last Week
Hyundai also joined the EV bandwagon and announced an $18 billion investment to increase its EV production capacity – as it strives to be among the top three EV players by the end of this decade.
Also, leaked images of what looks like a Tesla Model 3 revamp stirred a storm on the internet. The EV giant reports earnings next week and might provide some color on the rumored revamp of the model.
Boeing stock also tumbled by over 5.5% on Friday after it warned of delays in 737 deliveries due to supply chain issues.
US stocks meanwhile closed with gains last week despite falling on Friday. The Dow Jones rose 1.2% last week – its fourth positive week.
The Nasdaq rose only about 0.29% while the S&P 500 added 0.79% for the week. Both the indices were in the red in the previous week but have closed with gains in four of the last five weeks.
Bank Earnings Surprised on the Upside Last Week
Last week, JPMorgan Chase reported a massive earnings beat and reported record revenues. It also raised its full-year net interest income guidance by $7 billion. The stock rose over 7% on Friday as markets gave a thumbs up to its earnings
Citi also topped earnings estimates for the first quarter and closed around 4.8% higher on Friday. Wells Fargo’s earnings and revenues also topped estimates but the stock closed barely flat on Friday.
There are plenty of bank earnings lined up for the next week and Bank of America, Goldman Sachs, Morgan Stanley, Bank of New York Mellon, and M&T Bank would report their earnings.
Key Earnings to Watch Next Week
While bank earnings would get a lot of attention, we’ll also get several other key reports. Streaming giant Netflix would report its earnings on Tuesday where among others markets would await the commentary on its ad-supported tier.
Tesla would report its Q1 earnings on Wednesday. The stock is among the best-performing S&P 500 stocks and investors would gauge whether the Elon Musk-run company can justify the rally with commensurate financial performance.
Tesla has cut vehicle prices multiple times this year – and might face analysts’ questions on its future pricing strategy.
- Read our guide on buying Tesla stock
Several metal and mining companies like aluminum giant Alcoa, copper producer Freeport-McMoRan, and steel companies like Nucor and Steel Dynamics would also report earnings next week.
Key Economic Indicators to Watch Next Week
Next week, we’ll get several housing market indicators like housing starts, building permits, and existing home sales.
Notably, while US banks surprised on the upside with their Q1 2023 earnings their mortgage business sagged in the quarter.
We’ll also get the weekly jobless data next week which would provide more insights into the labor market.
The April flash PMIs would also be released next week – and show how resilient the US manufacturing and services sector is amid growing recession fears.
All said it is all about earnings next week as over 50 S&P 500 companies report their results. Markets have tepid expectations from earnings and consensus estimates call for an over 5% YoY fall in earnings.
The good news, however, is that analysts expect the first quarter to be the trough and predict an earnings rebound in the second half of the year – which is of course, contingent on economic growth.
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