Markets This Week, 7/17-7/21, 2023: Earnings, Manufacturing and Housing

Economy and Markets: The Week Ahead

The main investor focus this week will be the Q2 2023 earnings season. While the large and medium U.S. banks, along with other financials, continue to fill the earnings calendar, this week investor attention is shifting to prominent tech players Netflix (NFLX) and Tesla (TSLA).

Tesla is the first of the group of so-called “Magnificent Seven” to report its quarterly results. Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Nvidia (NVDA), and Meta (META) will all follow suit in the coming weeks. These seven mega-cap companies make up over 50% of the NASDAQ 100 (NDX) and about a quarter of S&P 500 (SPX), which means that any surprise in their earnings may have an outsized effect on stock performance, potentially determining the further path for this year’s rally.

The indexes’ top-heavy concentration has reached extreme levels last seen in the Dot-Com boom of 2000. The increase in market-cap concentration at the top of the index points at extreme valuations, which is disadvantageous for investors. However, the heavy concentration isn’t without its perks: investors will not have to anxiously wait for a long time for the results of this earnings season. According to Goldman Sachs (GS), companies representing 80% of S&P 500 market capitalization will report earnings by August 7^th.

Meanwhile, analysts continue to downgrade their earnings outlooks despite the stock market’s rally and the better-than-expected economic reports. While Wall Street’s pessimism is worrying, lowered expectations make for easier revenue and earnings surprises, which could add to the stock market’s gains.

In this uncertain environment, investors are advised to base their decisions on trustworthy data and analysis.

Upcoming Earnings and Dividend Announcements

This week will be very busy with earnings reports, as the financial companies and banks fill the calendar, while companies from the technology and other sectors join in.

The most anticipated reports outside of the financials are, of course, those of Netflix (NFLX) and Tesla (TSLA). In addition, markets will be anticipating the results of Lockheed Martin (LMT), ASML (ASML), IBM (IBM), Johnson & Johnson (JNJ), and several large and medium energy companies.

The most prominent reports emanating from the financial sector this week are those of Bank of America (BAC), Charles Schwab (SCHW), Morgan Stanley (MS), Goldman Sachs (GS), American Express (AXP), and several medium-sized and regional banks that were in the eye of the storm following the SVB collapse in March.

Companies’ reporting dates, consensus EPS forecasts, past data, analyst ratings, and price targets can be found on the TipRanks Earnings Calendar.

This week, Ex-Dividend dates are coming for the payouts of Abbott Labs (ABT), AbbVie (ABBV), Colgate-Palmolive (CL), CVS Health (CVS), Procter & Gamble (PG), and other dividend-paying firms.

Companies’ Ex-Dividend and Dividend Payment dates, analyst ratings, and price targets can be found on the TipRanks Dividend Calendar.

Upcoming Economic Calendar Events

There are several very important reports scheduled to be published in the next few days:

» On Monday, we’ll receive the data on July’s NY Empire State Manufacturing Index.

» On Tuesday, we’ll see published June’s Retail Sales and Industrial Production reports.

» On Wednesday, we’ll see published June’s Housing Starts and Building Permits reports.

Current and scheduled economic reports, Fed statements, and other releases, as well as their level of impact on stock markets, can be found on the TipRanks Economic Calendar.

Major Economic Events of the Past Week

» Initial Jobless Claims for the week ending June 30^th came in at 248K versus the expected 245K. Continuing Jobless Claims for the week ending June 23^rd were at 1.720M, lower than the expected 1.751M.

» May’s Consumer Credit rose by $7.2 billion, its smallest monthly increase since November 2020, from April’s $20.32 billion surge in borrowing. Non-revolving credit fell for the first time since April 2020, while revolving credit grew at a much slower pace.

» June’s NFIB Business Optimism Index rose to 91 from May’s reading of 89.4, indicating improving business conditions for the U.S. SME sector.

» June’s Consumer Price Index (CPI) dropped to 3% year-on-year, its slowest pace since March 2021, from May’s 4%. CPI Ex Food & Energy (core inflation) declined to 4.8% year-on-year from May’s 5.3%; although the core inflation remains sticky, it has also decelerated to its slowest since October 2021.

» June’s Producer Price Index (PPI) tumbled from May’s 0.9% to 0.1% year-on-year, the lowest producer price growth since the negative numbers of the Covid-19 times in August 2020.  

» July’s Michigan Consumer Sentiment Index (preliminary) surged to 72.6, its peak since September 2021, from June’s level of 64.4, indicating a return to strength in consumer spending.