As the final peak week of the Q1 season dawns upon us, investors find themselves navigating choppy financial waters. With bated breath, they analyze a mixed bag of earnings reports that have emerged victorious or lost in the ongoing battle of profit and loss statements.
First-quarter earnings have displayed a resilience, emerging better-than-expected, adding a glimmer of hope amidst a seascape of uncertainty. This momentum was further propelled by a strategic move unveiled at the latest Federal Open Markets Committee (FOMC) meeting, led by Federal Reserve Chairman Jerome Powell.
In a bid to calm the financial storm, Powell’s announcement of dodging a rate hike and a moderate slow-down in balance sheet reductions acted as a salve for the anxious market. Investors, hungry for signs of stability, welcomed this subtle easing of monetary policy with open arms.
However, hopes for a rate cut were further stoked by a surprising twist in US jobs data for April. With Nonfarm Payrolls landing below expectations at 175,000 and unemployment ticking up to 3.9%, uncertainty mingled with optimism in the financial air. The response was palpable as major US indices enjoyed a healthy 1 – 2% surge.
Turning the spotlight on earnings powerhouses, Amazon and Apple, the tale of triumph and turbulence unfolds. Amazon flexed its muscles with a stellar performance, driven by a robust 24% YoY growth in ad revenue and a 17% surge in Amazon Web Services (AWS). In contrast, Apple navigated stormy seas as iPhone sales plummeted by 10%, sparking concerns among investors. However, a $110B buyback announcement propelled the tech giant’s stock to a remarkable 6% after-hours spike.
Conversely, the dining industry felt the heat as consumer-centric giants like Starbucks, Coca-Cola, and Yum Brands stumbled in their Q1 results. With US consumers showing signs of moderation in dining expenditures, the looming specter of inflation cast a dark shadow on these once-thriving establishments.
In the backdrop, the earnings arena unveiled its wisdom with 80% of entities having shared their financial narratives so far. Year-on-year earnings growth stands firm at 5.0%, supported by a commendable 77% of companies surpassing analyst expectations. However, revenue struggles persist, with only 61% of corporations managing to outshine on the top-line, indicating a prevalent culture of cost-cutting to maintain profitability.
Anticipating a Wave of Earnings Revelations
Steering into the last peak week of the Q1 season, investors brace themselves for a deluge of financial data from 3,507 companies across various sectors. The stage is set for a spectacle, with eyes glued to key players like Palantir, Walt Disney, Lyft, Arm Holdings, Uber, and Airbnb, positioning themselves for volatility and potential market ripples.
Source: Wall Street Horizon
Unveiling Outlier Earnings Dates’ Impact
Delving into academic insights, a shift in a company’s scheduled earnings date beyond historical norms signals a possible storm on the horizon. This week, notable firms on major indices, like Loews Corp, Williams Companies Inc, and Vertex Pharmaceuticals, have pushed their Q1 2024 earnings dates beyond usual boundaries, stirring ripples of concern among astute observers.
* Wall Street Horizon DateBreaks Factor: a gauge of how an earnings date deviation compares to a company’s 5-year trend for the same quarter. Negative implies a delayed date compared to historical averages, while Positive heralds an earlier disclosure.
Riding the Q1 Earnings Tsunami
This pivotal week marks the climax of the Q1 earnings season, with a mammoth 3,507 entities poised to share their financial tales. May 9 emerges as the zenith of activity, with 1,236 corporations gearing up to unveil their performance. As 42% of companies have already voiced their financial narrative, the stage is set for an eventful finale to the earnings saga.
Source: Wall Street Horizon