Apple’s first quarter earnings report around 8am on Wednesday will be the big test for investors in the US and around the world, more so than Netflix overall solid figures were last week.
Apple, plus Amazon, Google, Facebook, Microsoft and Netflix had been holding up the wider US market earlier this month, although Apple shares have been weakening noticeably.
Google, Facebook, Microsoft and Amazon are due to report this week and between them they could change investor sentiment to the wider market if they beat expectations.
More than 400 companies, many of them in the Standard & Poor’s 500 will report this week, including the first round of reports from the damaged energy sector.
Apple Inc.’s fiscal first quarter is historically the company’s strongest period because of the holiday-selling season, but US analysts have been tempering their expectations for the quarter because of fears of a weaker-than-expected performance for the iPhone 6s models.
The key will be the performance in the huge Chinese market, and some analysts claim to have detected a slowdown in activity among some of the company’s component suppliers in recent weeks, leading to a sell off in Apple shares.
That has seen the shares retreat by more than 15% in the last three months, versus a 7% decline for the Dow Jones Industrial Average.
“We are going to be provided the clearest picture of not just backward looking fourth-quarter earnings, but much, much, much more importantly, guidance,” said Peter Kenny, equity market strategist at Kenny & Co LLC, in Denver, quoted by Reuters. "Guidance is going to be significantly more important in terms of that overall conversation of whether the US economy weathering the global storm."
"When you start to look at some of the forecasts for earnings growth in 2016, you’re not expected to see much in the first quarter or second," said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.
Names such as Chevron, Halliburton and Hess Corp will provide more clues of the damage done to earnings in the energy sector. Total last week warned of a 20% slide in 2015 earnings, Shell said its 4th quarter results would be off by just over 50%, while Schlumberger, the biggest services group in the world (and a major competitor to Halliburton), confirmed lower revenues, earnings and cut another 10,000 jobs.
And Dow components companies expected to report are Boeing (which last week revealed a half a billion dollar plus write down linked to the slowing in its building of 747 aircraft), McDonald’s, 3M Co and United Technologies.
These giant multinationals will be watched closely for indications of how the strong US dollar is impacting exports and profit margins.
Tonight sees 28 mostly US companies report, 68 on Tuesday, 68 on Wednesday, eBay, Facebook and Boeing, Microsoft, Amazon, Ford Motor and Chevron.
