What to know this week

The stakes on Wall Street are high this week as quarterly earnings flare and significant results are expected from companies like Netflix (NFLX), Tesla (TSLA) and Twitter (TWTR).

Investors reeling from Wednesday’s CPI data could take another blow if corporate finances show significant earnings slowdowns, with higher costs, rising interest rates and a possible slowdown in consumer spending, all themes to watch.

According to research by FactSet, S&P 500 companies are expected to grow second-quarter earnings at an estimated 4.0% annual rate, the lowest growth rate since the end of 2020, if realized.

As of June 30, the estimated earnings growth for the second quarter of 2022 was 4.0%.

As of June 30, the estimated earnings growth for the second quarter of 2022 was 4.0%.

The estimated net profit margin for the quarter is 12.4%, a figure that would mark the second consecutive quarter in which the net profit margin for the index has declined year-over-year. However, despite continued headwinds, analysts expect net profit margins for the S&P 500 to be higher for the remainder of the year.

“Investors will be looking for clarity during this earnings season about how companies are coping with rising costs and wages,” Richard Saperstein, chief investment officer of Treasury Partners, said in a note, adding that current earnings per share estimates are “too much.” optimistic given the deteriorating macroeconomic background.”

US stocks rose Friday but failed to recover from a turbulent week caused by June’s shocking inflation report. All three major benchmarks finished lower for the week.

In terms of revenue, big technical results are set to roll in over the next week, starting with Netflix results coming out Tuesday after the market closes.

The streaming giant expects to report a loss of 2 million subscribers in the second quarter, an important measure for investors.

Stocks are down 70% since the start of the year amid a broader flight in growth stocks.

The Netflix logo displayed on a phone screen and the Netflix website displayed on a laptop screen can be seen in this illustration photo, taken in Krakow, Poland on July 14, 2022. (Photo by Jakub Porzycki/NurPhoto via Getty Images)

The Netflix logo displayed on a phone screen and the Netflix website displayed on a laptop screen can be seen in this illustration photo, taken in Krakow, Poland on July 14, 2022. (Photo by Jakub Porzycki/NurPhoto via Getty Images)

After the close on Wednesday, Tesla earnings will also be in the spotlight.

Despite a COVID-related plant shutdown in China during the quarter, shipments from the Shanghai plant rebounded to hit a record last month. Last month, however, CEO Elon Musk warned of “feeling super bad” about the economy, saying the company will cut about 10% of jobs and “stop all hiring worldwide” as recession fears mount.

Tesla’s results also come as Musk prepares to fight Twitter in court after pulling out of a deal to buy the social media platform. Twitter is scheduled to report quarterly results for the bell on Friday.

Other notable names to reveal their results include Bank of America (BAC) and Goldman Sachs (GS) rounding out banking earnings on Monday, Johnson & Johnson (JNJ), United Airlines (UAL), AT&T (T) and Snap (SNAP) ).

Economic concerns continue

Last week, inflation data showed consumer prices rose 9.1% year-on-year in June, the highest annual rate since November 1981.

On Wall Street, the figure sparked a wave of speculation that Federal Reserve officials could raise interest rates by 100 basis points when they meet later this month. The move would mark the largest rate hike in three decades.

Analysts at Barclays led by Ajay Rajadhyaksha deemed talks of a full rate increase an “overreaction” in the note to customers Wednesday.

“We also believe that if the Fed really wants to raise 100 bps in July, it should report it to the markets before the blackout period starts on July 16,” Barclays said. “Yes, they broke the outlook at the June meeting by going 75 bps despite previously ruling that out, but that month’s CPI report got well into the blackout period and they felt they were in control of that.” seize the inflation story.”

If the Federal Reserve puts too much emphasis on June’s CPI value, the Federal Reserve “risks creating a sense of panic,” Andy Sparks, MSCI’s chief of research, portfolio management research, said in a note.

“It also risks overshooting an economy that is too big and pushing an economy that has shown signs of weakness into a full-blown recession.”

Federal Reserve Chairman Jerome H. Powell arrives for a House Committee on Financial Services hearing on Capitol Hill June 23, 2022 in Washington, DC.  (Photo by Brendan Smialowski/AFP) (Photo by BENDAN SMIALOWSKI/AFP via Getty Images)

Federal Reserve Chairman Jerome H. Powell arrives for a House Committee on Financial Services hearing on Capitol Hill June 23, 2022 in Washington, DC. (Photo by Brendan Smialowski/AFP) (Photo by BENDAN SMIALOWSKI/AFP via Getty Images)

Economists at Bank of America said last week they now expect a “mild recession” this year. The company’s stock strategists have also updated their S&P 500 target to imply the index will fall 25% from its January 3 record high, noting that the stock market’s average decline during recessions is 31%.

The benchmark fell about 19.5% from Friday’s close.

On Thursday, Christopher Waller, a member of the Federal Reserve’s Board of Governors, said he would be open to an increase of one full percentage point if upcoming economic releases point to strong consumer spending, but he maintained his support for a 0 rate. .75%.

The comments came on the heels of a similar signal from Atlanta Fed President Raphael Bostic Wednesday, telling reporters in St. Petersburg, Florida that “all is in play” when asked about the possibility of a full percentage point increase.

However, data on retail sales and inflation expectations released Friday seemed to dampen some investors’ belief that a 1% rate hike will come later this month. According to data from the CME Group, markets now estimate a 29% chance of a 100 basis point move this month; on Thursday morning, this figure was north of 80%.

Economic calendar

Monday: NAHB Housing Market IndexJuly (66 expected, 67 in previous month), Net Long Term TIC OutflowsMay ($87.7 billion in the previous month), Total Net TIC OutflowsMay (1.3 billion in previous month)

Tuesday: Housing beginsJune (1.590 million expected, 1.549 million in the previous month), Building permitsJune (1.673 million expected, 1.695 million last month), Housing beginsmonth-on-month, June (2.7% expected, -14.4% last month), Building permitsmonth-on-month, April (-1.3% expected, -7.0% over prior month)

Wednesday: MBA Mortgage Applicationsweek ending July 15 (-1.7% during previous week), Existing home salesJune (5.40 million expected, 5.41 million in previous month), Existing home salesmonth-on-month, June (-0.2% expected, -3.4% over prior month)

Thursday: Philadelphia Fed Business Outlook IndexJuly (-1.0 expected, -3.3 last month), First applications for unemploymentweek ending July 16 (240,000 expected, 244,000 during previous week), Continuing Claimsweek ended July 9 (1.345 million expected, 1,331 in previous week), Leading indexJune (-0.5% expected, -0.4% last month)

Friday: S&P Global US Manufacturing PMIprovisional July (51.8 expected, 52.7 during the previous month), S&P Global US Global Services PMIprovisional July (52.4 expected, 52.7 during the previous month), S&P Global US Composite PMI, Provisional July (52.3 during the previous month)

Income calendar

Monday:

Before the market opens: bank of America (BAC), Goldman Sachs (GS), Charles Schwab (BLACK), Synchrony Financial (SYF), Prologue (PLD)

After market close: IBM (IBM)

Tuesday:

Before the market opens: Johnson & Johnson (JNJ), Trust Financial (TFC), Interactive Brokers (IBKR), JB Hunt Transport (JBHT), Cal-Maine Foods (CALM), Ally Financial (ALLEY), Lockheed Martin (LMT), Hasbro (HAS), Halliburton (HALL)

After market close: Netflix (NFLX)

Wednesday:

Before the market opens: biogen (BIS), Baker Hughes (BKR), Comeric (CMA), Nasdaq (YET), Abbott Laboratories (ABBOT), Northern Trust (NTRS)

After market close: Tesla (TSLA), United Airlines (UAL), Knight-Swift Transport (KNX), Steel dynamics (STLD), Discover Financial (DFS), Equifax (EFX), Elevation Health (PRINCIPLE), alcohol (AA), FNB (FNB)

Thursday:

Before the market opens: AT&T (T), Travelers (TRV), DR Horton (DHI), black stone (BX), Union Pacific (UNP), US Airlines (AL), Dow (DOW), Nokia (ENOUGH), danaher (DHR), Fifth Third Bancorp (FITB), Tractor delivery (TSCO), Marsh McLennan (MMC), Interpublic (IPG)

After market close: snap (SNAP), Mattel (MAT), PPG Industries (PPG), Dominoes (DPZ), Tenet Healthcare (THC), Boston beer (SAM),

Friday:

Before the market opens: Twitter (TWTR), American Express (AXP), Verizon Communications (VZ), HCA Healthcare (HCA), Schlumberger (SLB), Regions Financial (RF), Cleveland Cliffs (CLF)

After market close: No notable reports planned for release.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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