Whatās Going On Here?Companies have started to announce how they performed in the first quarter of the year, but forward-looking investors are more interested in how theyāll hold up in the dystopian future that awaits themā¦ What Does This Mean?An assortment of companies ā together representing 18% of the US stock market ā will report their earnings this week, and theyāre expected to be 10% lower on average than the same time last year.
Given the dramatic selloff last month, that expectation is probably already factored into stock prices. Instead, the direction of stocks from here on out will be driven by earnings predictions for the rest of this year and the next. Last week, the stock market regulator urged companies not to use their quarterly updates to focus on the past like they normally do, but rather to tell investors where they stand today and how coronavirus may impact them moving forward. That, they argued, would be far more relevant. Why Should I Care?For you personally: Tech-tical thinking.
Weighing in at over 20% of the US stock market, the tech sector is bound to attract Finimizersā attention when its companies begin reporting next week. But thereās an industry split that might create opportunities for the savviest investors. Analysts are expecting demand for Netflix and Amazonās products to stick around during the pandemic, which might explain why their share prices are near all-time highs. Facebook, Twitter, and Google-parent Alphabet might not be so lucky, mind you: they rely on advertising spending, and its decline will probably dent their earnings.
For markets: No more tears.
Pharmaceutical giant Johnson & Johnson (J&J) reported backward-looking first-quarter results that actually exceeded investorsā expectations. The company also announced itād pay a higher dividend to its shareholders than theyād hoped for. And looking to the future, J&J did what investors reckon lots of companies might: it lowered its sales and profit forecast for the rest of 2020. | 