[Asia Economy New York=Special Correspondent Joselgina] As the US Nasdaq index, centered on technology stocks, has entered a 'technical correction' phase, falling more than 10% from its previous peak, major companies such as Apple, Microsoft (MS), and Tesla will consecutively release their earnings this week. These companies account for about one-fifth of those included in the S&P 500 index.
According to financial information provider FactSet on the 23rd (local time), the major companies scheduled to announce earnings this week are ▲ IBM, Halliburton (24th) ▲ MS, Johnson & Johnson, General Electric (GE), American Express, Verizon, 3M, Lockheed Martin, Capital One, Texas Instruments (25th) ▲ Tesla, Whirlpool, Intel, Boeing, AT&T, Boeing, Lam Research, ServiceNow (26th) ▲ Apple, McDonald's, Visa, Comcast, Blackstone, Mastercard, JetBlue, Southwest Airlines, Robinhood (27th) ▲ Chevron, Caterpillar (28th).
The Wall Street Journal (WSJ) reported, "About one-fifth of the S&P 500 companies and nearly half of the Dow Jones 30 Industrial Average companies will announce quarterly earnings this week," adding, "Amid the sharp decline in the Nasdaq index, the earnings of Apple, MS, and Tesla will headline."
The big tech companies highlighted by WSJ, including Apple, MS, and Tesla, have seen their stock prices surge over the past two years since the outbreak of COVID-19. However, recently, as speculation has spread that the US central bank, the Federal Reserve (Fed), will begin early tightening, their stock prices have been declining. MS's stock price has fallen 12% this year, and Apple has retreated 8%.
According to FactSet's survey, analysts are optimistic about the quarterly earnings of these three companies.
MS's quarterly revenue, to be announced on the 25th, is expected to exceed $50 billion (approximately 59.6 trillion KRW) for the first time ever. Net income is also anticipated to reach a record high of $17.41 billion. WSJ reported that investors want to hear explanations regarding MS's largest-ever acquisition, the Activision Blizzard deal.
Apple, which will announce its earnings on the afternoon of the 27th, is also expected to break all-time records. Quarterly revenue is estimated at $118.74 billion, with net income at $31.16 billion. Tesla is forecasted to report quarterly revenue of $16.99 billion and net income of $2.33 billion. Analysts are paying close attention to what Tesla will say about supply chain issues, as it has managed the shortage of automotive semiconductors better than other companies.
Brian Belski, Chief Investment Strategist (CIS) at investment bank BMO Capital, stated that investors will want to analyze the success stories of technology companies with strong fundamentals.
However, concerns about tightening around the New York stock market remain. Although earnings announcements from MS, Apple, Tesla, and others are scheduled, there is a view that stock prices will find it difficult to rebound unless there is a significant earnings surprise. Federal Reserve Chair Jerome Powell is expected to signal at the Federal Open Market Committee (FOMC) meeting on the 25th-26th (local time) that tapering (asset purchase reduction) will be completed in March and that interest rate hikes will begin.
The market has already practically confirmed an earlier-than-expected pace of tightening. Last week, the US Treasury yields surged, and global stock markets retreated largely due to fears surrounding early tightening. The three major indices of the New York stock market?the Dow Jones, S&P 500, and Nasdaq?fell by 4.6%, 5.75%, and 7.55%, respectively, last week alone. In particular, the Nasdaq index, focused on technology stocks, fell more than 10% from its peak, entering a 'technical correction' phase. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's fear gauge, rose more than 10 points from the beginning of the year to 28.85 (on the 21st).
This week, the International Monetary Fund (IMF) will release its revised World Economic Outlook report, along with the US fourth-quarter GDP and the US Personal Consumption Expenditures (PCE) that the Fed closely monitors. The IMF had originally planned to release the revised report on the 19th but postponed it by a week to further review the impact of the recent Omicron spread. The key issue is how much the global economic growth forecast will be revised downward.
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