Monday 23rd April 2018
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US tech heavyweights are set to report their latest earnings this week along with a barrage of other companies including Boeing, while first-quarter GDP is expected to show an easing of the nation’s growth.
This week will offer results from Alphabet, Facebook, Amazon, Twitter, Intel and Microsoft at a time when industry sentiment has been wavering. Apple reports next week.
Last Friday, a slide in Apple and other tech stocks weighed on Wall Street. The Dow Jones Industrial Average slid 0.8 percent, the Standard & Poor’s 500 Index dropped 0.9 percent, and the Nasdaq Composite Index fell 1.3 percent.
For the week, however, the Dow added 0.4 percent, the S&P 500 increased 0.5 percent, and the Nasdaq gained 0.6 percent.
“Investor sentiment with tech stocks is in a long, slow retreat,” Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma, told Reuters. “If guidance is significantly more optimistic than what was expected, they might get a pop on that, but anything negative will be disastrous.”
And it is not just the tech sector where investors have high expectations when it comes to results.
“As we get further into the bull market cycle, US companies have to try harder and harder to make investors happy, and that’s tough,” Frank Ingarra, the head trader at NorthCoast Asset Management, told Bloomberg. “Investors set their bars really high.”
Among the other US companies set to report in the coming days include Visa, Caterpillar, Halliburton, 3M, Texas Instruments, Chevron and Exxon Mobil.
Concern about rising inflation and a steeper path of interest rate increases also dampened the mood. US Treasuries dropped on Friday, lifting yields on the 10-year note 5 basis points to 2.96 percent, a four-year high. A test of 3 percent is imminent.
Fresh reports on the US economy slated for release this week include the Chicago Fed national activity index, PMI composite, and existing home sales, due today; S&P Corelogic Case-Shiller and FHFA home price indices, new home sales, consumer confidence, and Richmond Fed manufacturing index, due Tuesday; durable goods orders, international trade in goods, and weekly jobless claims, due Thursday; as well as gross domestic product, employment cost index, Chicago PMI and consumer sentiment, due Friday.
A Thomson Reuters survey of economists predicted GDP grew at an annualised 2 percent in the first quarter, easing from the 2.9 percent pace in the previous quarter. Growth is expected to renew in the June quarter.
In Europe, the Stoxx 600 Index ended Friday little changed from the previous day’s close.
European Central Bank policy makers gather on Thursday and are not expected to announce a change in interest rates.
“We look for patience and prudence from the ECB, with little new from the governing council aside from acknowledgement that recent activity data has softened a little, but that it should not affect their medium-term forecast,” TD Securities said in a note on Friday.
“Upside risks to growth are likely to be dropped, but the ECB will maintain a cautious optimism around its inflation outlook,” according to TD Securities.
But first, the latest economic reports set for release include eurozone manufacturing and services PMIs, due today, as well as Germany’s Ifo business climate, due Tuesday and eurozone economic confidence, due Friday.
"Manufacturing PMIs have been on the decline since December, and we expect this to continue," Citigroup said in a note on Friday. “We expect eurozone economic sentiment and Germany’s Ifo business climate to moderate for a fourth consecutive month."
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