SP 500 Earnings: More Inflation Data Due this week, Along with Mega-Cap Tech Earnings

The attached template (from Briefing.com) on expected economic data next week, including the first look at Q1 ’23 GDP, the GDP deflator, and the PCE and Core PCE deflator will all be closely watched, by the Fed and inflation-watchers.

For the GDP deflator and the PCE data, the expectations are for “unch’ed” or for an improvement in the data.

What’s more, about 180 SP 500 components will report their Q1 ’23 financial results, so by next Friday, April 28th, 2023, (the last trading day of April), more than half the SP 500 will have reported Q1 ’23 results.

And then in the first week of May – May 3rd to be exact – we get the next FOMC announcement on monetary policy, and at present, there is an 88% chance of a bump in the fed funds rate to 5% – 5.25%, per the CME Fedwatch tool. That could change next week, too, given all the data expected to be released.

SP 500 data: 

  • The forward 4-quarter estimate slid again this week to $225.86 from $226.29 last week, and versus $228.38 from early, 2023;
  • The PE ratio is 18.3x versus 17x to start the year;
  • The SP 500 earnings yield is 5.46% this week, versus 5.49% last week and 5.86% as of early January ’23.

Since Q1 ’23 earnings started two weeks ago, when quarterly EPS was expected to decline 5%, the expected decline today is -4.7%. The expected revenue growth for the SP 500 two weeks ago was +1.6%, and that’s now risen to +1.9%.

It’s clear the earnings issue for the SP 500 is in the first two quarters of 2023, given the tough compares with the first two quarters of 2022 last year, and then the back half of the 2023 year gets easier.

Mega-Cap earnings next week: 

  • Tuesday, 4/25: Microsoft (MSFT) reports their fiscal Q3 ’23 after the close;
  • Tuesday, 4/25: Alphabet (GOOGL) reports their Q1 ’23 financial results after the market close;
  • Wednesday: 4/26: Meta (META) reports their Q1 ’23 financial results after the market close;
  • Thursday, 4/27: Amazon (AMZN) reports their fiscal Q1 ’23 financial results after the market close;

Apple reports the week following on May 4, 2023. Coca-Cola (KO) reports Monday morning, April 24th, and Boeing (BA) is slated to report their Q1 ’23 on Wednesday morning, April 26th.

Summary / conclusion: CNBC is calling next week a “monster week” for earnings releases, but it’s little different than other quarters given that – once again – the mega-caps all report next week, with the exception of Apple.

Low expectations coming into an earnings quarter typically results in the better chance for upside in the stocks once earnings are actually released. That’s no different this quarter given the expected SP 500 EPS and revenue growth rates of -5% and +1.6% three weeks ago when the quarter started.

Technology has mostly tough compares with Q1 ’22, which will talked about in a separate write-up on this blog before the weekend is over, with Google facing the toughest compare versus Q1 ’22, and then which gets much easier as we move through 2023.

Take all this with considerable skepticism. It’s one person’s opinion. All EPS and revenue data is sourced from IBES data by Refinitiv. Past performance is no guarantee of future results. Capital markets change quickly, both positively and negatively.

Thanks for reading.

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