Wall Street stocks ended lower Friday, capping another losing week as tech stocks tumbled amid growing pessimism that the U.S. Federal Reserve could soon cut interest rates. became.
It was the sixth consecutive session of decline, marking the longest losing streak since October 2022. The downtrend came as AI darling Nvidia (NASDAQ:) was sold off, adding to recent market woes related to geopolitical conflict and persistent inflation.
For the week, the benchmark fell 3.1%, the Nasdaq fell 5.5%, but stocks were unchanged.
Source: Investing.com
The coming week is expected to be an eventful one with earnings season in full swing, with reports reporting Microsoft (NASDAQ:), Alphabet (NASDAQ:), Metaplatforms (NASDAQ:), and Tesla (NASDAQ:). ).
Other notable reporters include Intel (NASDAQ:), IBM (NYSE:), Snap (NYSE:), General Motors (NYSE:), Ford (NYSE:), AT&T (NYSE:), Verizon (NYSE:) , Caterpillar (NYSE:), Boeing (NYSE:), United Parcel Service (NYSE:), ExxonMobil (NYSE:), Chevron (NYSE:), Visa (NYSE:).
The most important addition to earnings on the economic calendar will be Friday’s core personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation.
Core PCE, which excludes volatile food and energy prices, is expected to rise 2.6% year over year in March, slowing from 2.8% the previous month, according to Investing.com.
Other economic indicators expected to fall include first-quarter GDP figures, which will provide further clues as to whether the economy is headed for a soft landing.
Source: Investing.com
Meanwhile, Federal Reserve officials will enter a blackout ahead of the U.S. central bank’s policy meeting scheduled for May 1.
Traders currently believe there is about a 70% chance that the first rate cut will take place in September, according to Investing.com.
Regardless of which direction the market goes, here are stocks that are likely to be in demand and that are poised for new downside. However, my time frame is: just For the next week, Monday, April 22nd to Friday, April 26th.
Stock to buy: Metaplatform
We expect social media giant Meta Platforms (NASDAQ:) to outperform again this week. That’s because the social media giant is likely to deliver another quarter of solid revenue and bottom-line growth, offering a positive outlook as conditions in the digital advertising market improve.
Meta plans to provide a first-quarter update after the U.S. market closes at 4:05 p.m. ET on Wednesday. A conference call with CEO Mark Zuckerberg and CFO Susan Lee is scheduled for 5 p.m. ET.
Market participants expect META stock to move significantly after printing, with an expected move of around 9% in either direction, according to options markets. The stock price has soared nearly 22% since the company’s last earnings report in February.
According to research by InvestingPro, social media networks Facebook, Messenger, Instagram, Reels, Threads, and WhatsApp.
Source: InvestingPro
Meta, a Menlo Park, California-based technology company, is expected to report earnings of $4.36 per share in the first three months of 2024 as it continues to focus on improving operational efficiency and reducing expenses. , up 98% from the year-ago quarter’s EPS of $2.20.
Meanwhile, sales are expected to rise 26.3% year over year to $36.2 billion, driven by strong digital ad sales and increased adoption of Reels’ short video products.
That’s why Meta CEO Mark Zuckerberg offers an upbeat outlook for the current quarter as the social media company benefits from a growing user base and new AI initiatives, including its AI-powered Advantage+ ad sales platform. I believe that I am deaf.
META stock, which rose to an all-time high of $531.49 on April 8, closed at $481.07 on Friday. At current levels, Meta’s market capitalization is $1.22 trillion, making it the sixth-largest company traded on a U.S. stock exchange.
Source: Investing.com
The stock has soared 125% in the past 12 months, rising in line with most of the tech sector.
As ProTips points out, Meta is in very good financial shape thanks to an attractive valuation and strong balance sheet, as well as strong earnings and revenue growth prospects.
Inventory for sale: Tesla
Tesla (NASDAQ:), which closed at a 52-week low on Friday, faces a more difficult week ahead as Elon Musk’s electric car maker failed to deliver underwhelming profits and the outlook is weak due to various negative impacts. I think we will suffer from this. Business is facing headwinds.
Tesla’s first quarter update is scheduled to be released after the close of trading on Tuesday at 4:05pm ET and will likely be one of the most closely watched reports of the week. A conference call with analysts is scheduled for 5:30 p.m. ET.
Highlighting some near-term headwinds facing Tesla in the current climate, 14 out of 15 analysts surveyed by InvestingPro said the company’s forecasts are down more than 50% from initial expectations. , lowered its EPS forecast for the past three months.
Market participants expect TSLA stock to move significantly following the print, with options markets predicting a move of about 10% in either direction. Notably, TSLA stock fell nearly 13% after the last earnings release, marking the fourth straight day of declines on earnings reaction day.
Source: InvestingPro
Consensus estimates call for the Austin, Texas-based EV giant to post earnings of $0.50 per share, down 41.2% from the year-ago quarter’s earnings of $0.80.
Sales are expected to decline 4.3% year-on-year to $22.3 billion, and the negative effects of the ongoing price-cutting strategy are likely to put pressure on automotive gross profits again.
Despite the price cuts, Tesla is struggling with demand concerns and rising inventory levels amid increased competition from traditional legacy automakers and Chinese EV startups.
As such, I think Elon Musk and Tesla’s management will disappoint investors with their forward guidance for this quarter, demonstrating a cautious stance amid an uncertain macroeconomic environment and declining operating margins. There is.
TSLA stock closed at $147.05 on Friday, its lowest since January 25, 2023. At current valuations, the EV company has a market capitalization of $469 billion.
Source: Investing.com
The stock is down 40.8% since the beginning of the year, giving it the dubious title of the S&P 500’s worst performing stock.
InvestingPro’s ProTips highlight Tesla’s shaky outlook, highlighting low gross margins, declining profit growth, and declining net income. Additionally, the company’s stock currently trades at a high earnings and earnings valuation multiple.
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Disclosure: As of this writing, I am long the S&P 500, but via SPDR. S&P 500 ETF (SPY), and Invesco QQQ Trust ETF (QQQ).
I regularly rebalance my portfolio of individual stocks and ETFs based on an ongoing risk assessment of both the macroeconomic environment and corporate finances.
The views expressed in this article are solely those of the author and should not be taken as investment advice.
