What to Expect in the Week Ahead (TSLA, META, GOOG, MSFT Earnings; PCE Inflation)

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What to Expect in the Week Ahead (TSLA, META, GOOG, MSFT Earnings; PCE Inflation)

Earnings Preview

Next week's earnings reports from major technology companies might provide a boost to a weakening market, or at the very least, offer investors insight into future stock trends.

$Tesla(TSLA.US)$ is set to release its earnings on Tuesday, followed by $Meta Platforms(META.US)$ on Wednesday. The week continues with a significant day on Thursday, as $Alphabet-C(GOOG.US)$ , the parent company of Google, and $Microsoft(MSFT.US)$ both announce their earnings.

It's important to highlight that there is a strong bearish outlook from the sell-side in anticipation of Tesla's first-quarter report, fueled by concerns about declining interest in its electric vehicles and increasing rivalry from both established car manufacturers and emerging Chinese EV companies. The stock of the Elon Musk-helmed firm has seen a nearly 40% decline since the beginning of the year.

On Wednesday, we'll see financial results from $IBM Corp(IBM.US)$ , $Boeing(BA.US)$ , $AT&T(T.US)$ , $Ford Motor(F.US)$ , and $Chipotle Mexican Grill(CMG.US)$. However, the spotlight will mainly be on Meta Platforms that day, as the company behind Facebook and Instagram is poised to announce what could be one of its most lucrative quarters ever.

Shares of META have experienced a remarkable surge over the last 12 months, soaring by an impressive 130%, as investors have been buoyed by the company's recent ventures into artificial intelligence and the vigorous cost-reduction measures put into place by CEO Mark Zuckerberg.

Thursday marks yet another significant day for earnings, with a lineup of companies including $Caterpillar(CAT.US)$ , $Honeywell(HON.US)$ , $Southwest Airlines(LUV.US)$ , $American Airlines(AAL.US)$ , $Royal Caribbean(RCL.US)$ , $Comcast(CMCSA.US)$ , $Merck & Co(MRK.US)$ , and $Newmont(NEM.US)$ all set to report their financial outcomes before the market opens.

Following those reports, investors will shift their focus to the post-market earnings announcements from Microsoft Corporation and Alphabet. As these two tech behemoths together approach a combined market capitalization of almost $5 trillion, their financial performance will be crucial for the continuation of the stock market's current upward trend.

The majority of attention will center on the success of Microsoft's Intelligent Cloud division, encompassing services such as Azure public cloud, Windows Server, SQL Server, Visual Studio, Nuance, GitHub, and Enterprise Services. For Alphabet, the spotlight will remain on the expansion pace of its Google Cloud Platform.

As the week wraps up on Friday, our focus will be on the financial reports from petroleum heavyweights $Exxon Mobil(XOM.US)$ and $Chevron(CVX.US)$ , particularly their insights on future supply and demand expectations in the midst of the volatile geopolitical environment.

Fed's preferred measure of inflation

In addition to corporate earnings, the main event as far as macroeconomic updates are concerned will come at the end of the week, with the release of March personal spending and income data.

Inside Friday's report, the core personal consumption expenditures (PCE) price index for March, which is the inflation gauge favored by the Federal Reserve is the most important one.

Expectations are for the core PCE price index to show a 0.3% increase from the previous month, consistent with the rise observed in February. The year-over-year rate is anticipated to edge up to 2.7%, slightly down from the 2.8% annual rate reported in the month prior.

Should the data reveal a stronger-than-anticipated increase, it could reinforce the Federal Reserve's commitment to its anti-inflationary stance. Conversely, a figure below expectations, particularly if it dips to 2.6% or lower, may fuel speculation about potential interest rate cuts.