Netflix might have surprised on the upside last week, but the health of the US high value tech sector and the direction of Wall Street shares could very well be settled in the next week or so as the rest of those giants report.
In fact a 7% slide in the share price of Apple last Thursday and Friday tells us that investors are suddenly very anxious about the high tech giants.
In Australia there will be a few more quarterly reports from mining companies (such as OceanaGold), while vitamins group, Blackmore’s releases its quarterly update mid week, as does Iron Mountain, the US based data storage company that is also listed here.
Resmed, the sleep products group listed here and on Wall Street also releases its quarterly figures on Thursday, after the Anzac Day break.
But attention will be on Wall Street where Amazon, Facebook, Intel, Microsoft and Google will release quarterly reports this week, Apple the week after.
The quality of these reports, the outlook commentaries and for Apple, the actual sales numbers, will go a long way to convincing investors that the market’s momentum remains positive, or is losing steam.
If the news is weak or unconvincing, we could see the sell off continue in the wake of Friday’s shake up which saw all parts of the market under pressure with the Dow and the S&P 500 falling 0.8% each and the tech heavy Nasdaq off nearly 1.3%.
Not helping was a four year high for the key US 10 year bond yield which closed at 2.96% and seems on the way to topping the 3% for the first time since 2014.
Nearly 200 member companies on the S&P 500 are down to report as well – toymakers Hasbro and Mattel, Lockheed Martin, Boeing, Northrop Grumman, Harley-Davidson, American Airlines, ExxonMobil and Chipotle. US Steel, Peabody Energy, Whirlpool, Visa, Viacom, PayPalFord, GM, Royal Dutch Shell, Coca Cola, Pepsi, Southwestern Airlines, 3M, Caterpillar, Chevron, ConocPhillips, Verizon, AT&T, Starbucks, Newmont Mining and Twitter.
Most companies will see continuing benefits from the Trump corporate tax cuts, but investors will be looking through these to what lies ahead, especially with interest rates rising and uncertainty growing.
Reuters says S&P 500 companies are expected to report their strongest first-quarter profit gains in seven years. Of the 87 companies that have reported so far, 79.3% have topped profit expectations, according to Thomson Reuters.
But it will be the reports from the handful of giant tech companies that will dominate the market
There is an increasing scepticism about the performance of these giant tech groups, especially Facebook in the wake of the Cambridge Analytics data misuse scandal and Apple, after suggestions emerged late last week of waning sales of computer chips used in smartphones, like the iPhone.
That saw Apple shares lose 4.1% on Friday and 2.8% on Thursday 7% in two days on these fears of a weak sales effort to be revealed in the March quarter report to be released on May 1.
Apple shares fell Friday after Morgan Stanley estimated weak demand for its latest iPhones. That came a day after Taiwan Semiconductor raised fears of softer smartphone sales based on weaker chip sales.
Before that Google-parent Alphabet and Facebook are due to report this week, along with Microsoft and chip giant, Intel (both on Thursday night, our time). Amazon is down to report on Thursday as well, Facebook on Wednesday, but Alphabet starts the week with a report tomorrow morning, our time.
Microsoft, Intel, Alphabet, Facebook and Amazon all lost between 1 and 2% on Friday in the wake of those fears about Apple’s weak sales report. Netflix shares fell almost 1.5% as well, despite the record breaking report on Monday.
When Alphabet and Facebook report this week, investors will be anxious for new details about how they may be affected by calls for increased government regulation following the Cambridge Analytica data misuse scandal emerging in mid-March.
Amazon shares are up 31% so far this year (so much for Tump’s silly attacks on the online giant), while Netflix has soared 73 percent. But Facebook and Apple, meanwhile, are both down year to date, while Alphabet’s 2.4% gain is little higher than the S&P 500’s flat performance.
