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Apple and Tesla Earnings in Focus as Nasdaq 100 Falls right into a Technical Correction


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NASDAQ 100 FORECAST: Impartial

  • The Nasdaq 100 index fell over 10% from December excessive as earnings season arrives
  • Buyers anxious that rising wage inflation and Fed charge hikes might dampen earnings prospects
  • Apple, Tesla and Microsoft outcomes are in focus this week, which is able to set the tone for Nasdaq 100

The Dow Jones, S&P 500 and Nasdaq 100 indices consolidated at the beginning of 2022, weighed by rising treasury yields and expectations that the Fed might kick off a rate-hiking cycle as early as March. US inflation hit a four-decade excessive of seven% in December, spurring issues about wage inflation and its ramification for company earnings.

Rising worth ranges have had a damaging influence on banks’ earnings. Though some have managed bills effectively, the others haven’t. JPMorgan, Citibank and Goldman Sachs highlighted rising bills of their earnings name, with greater labor prices squeezing web revenue margins. Monetary sector usually underperformed final week, setting a bitter tone for the broader market. Netflix additionally dissatisfied traders by giving a lot lower-than-expected steering for brand new subscribers within the coming quarter.

Wanting forward, round 22% of the S&P 500 firms are reporting outcomes this week. These embrace large tech names akin to Apple, Microsoft and Tesla, which accounts for round 6.2%, 5.2% and a pair of.2% of the S&P 500 index weighting respectively. Due to this fact, their outcomes are more likely to have an outsized influence on market sentiment and can set the tone for the Nasdaq 100 index.

Equities Earnings Breakdown

Supply: Bloomberg, DailyFX

In response to Factset, the S&P 500 is anticipated to ship a broad earnings development charge of 21.8% YoY for the fourth quarter, marking the fourth straight quarter of earnings development above 20%. The precise development charge might be even greater as nearly all of company America tends to present conservative EPS forecasts in an try and engineer optimistic surprises when realized outcomes are printed. Greater EPS readings might successfully carry down the price-to-earnings (PE) ratio for the S&P 500, Nasdaq 100 and Dow Jones, cushioning their draw back potential.

Main US Earnings EPS Forecast – Week 25-28

US Earnings EPS Forecast

Jan Supply: Bloomberg, DailyFX

Apple:

  • EPS of $1.903 and income of $119.2 billion anticipated for This fall
  • Apple might spotlight provide chain challenges because of the influence of Omicron on factories’ operations
  • Demand for the iPhone 13 stays strong, however the firm’s capacity to fulfil orders stays in query
  • Providers income is anticipated to stay robust, and it may offset among the weak spot on the merchandise aspect of the enterprise
  • Apple is buying and selling at 29.34 instances earnings (P/E), far above its five-year common of 22.51

Microsoft:

  • EPS of $2.316 and income of $50.88 billion anticipated for This fall
  • The diploma of gross sales outperformance may soften when the corporate reviews outcomes as development firms face a more durable backdrop in This fall
  • Gross sales within the cloud enterprise might decelerate because the latest improve in Covid-19 instances means decrease demand from purchasers within the service sector
  • The proposed acquisition of Activision can be in focus in the course of the earnings name
  • Microsoft is buying and selling at 36.47 instances earnings (P/E), above its five-year common of 27.5

Tesla:

  • EPS of $2.309 and income of $16.6 billion anticipated for This fall
  • It might be one other robust season for gross sales, as the corporate’s deliveries surged about 87% from a 12 months in the past within the fourth quarter
  • Demand for product is strong as Tesla is more likely to stay the first BEV selection for many of 2022
  • A possible delay within the launch of the Cybertruck, a semiconductor scarcity and supply-chain points can be in focus
  • Tesla is buying and selling at 320 instances earnings (P/E)

— Written by Margaret Yang, Strategist for DailyFX.com

To contact Margaret, use the Feedback part under or @margaretyjy on Twitter





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