Equities on Wall Street experienced a downturn last week, extending a losing streak as tech stocks nosedived amid rising doubts about the Federal Reserve’s imminent rate cut. The S&P 500 retreated for a sixth consecutive session, marking its lengthiest negative run since October 2022. This decline coincided with a sell-off in Nvidia shares, intensifying the market’s recent challenges tied to geopolitical tensions and persistent inflation concerns.
The week concluded with the benchmark S&P 500 falling by 3.1%, the Nasdaq plunging by 5.5%, and the Dow Jones Industrial Average remaining stagnant.
The upcoming week promises substantial activity as earnings season enters a crucial phase, with reports anticipated from several major companies, including Microsoft, Alphabet, Meta Platforms, and Tesla.
Amidst earnings announcements, a pivotal economic event to watch out for is Friday’s release of the core personal consumption expenditures (PCE) price index, a key inflation metric favored by the Fed.
According to forecasts from Investing.com, the core PCE is anticipated to rise by 2.6% year-over-year in March, a slight deceleration from the previous month’s 2.8% growth.
Other economic indicators set to be unveiled include the preliminary GDP figures for the first quarter, offering insights into the trajectory of the economy.
Furthermore, as the US central bank’s policy meeting looms in May, Federal Reserve officials will observe a blackout period, limiting public commentary.
Traders are currently estimating a 70% likelihood of an initial rate cut by September, as per Investing.com’s data.
Irrespective of market direction, let’s delve into analyses predicting the performance of two prominent stocks for the upcoming week.
Insight into Meta Platforms:
Anticipations are high for Meta Platforms to shine during the forthcoming week. The social media powerhouse is poised to present robust top and bottom-line growth, with an optimistic outlook buoyed by favorable conditions in the digital advertising landscape.
After the US market closes on Wednesday, Meta Platforms will release its Q1 update, followed by a earnings call featuring CEO Mark Zuckerberg and CFO Susan Li.
Market analysts foresee a substantial market reaction post-Meta’s earnings report, with options indicating a potential 9% swing in either direction. In the prior quarter, shares skyrocketed by nearly 22%.
Noteworthy is the significant uptrend in profit projections, with 21 upward revisions compared to zero downward adjustments, pointing to Wall Street’s growing bullish sentiment towards the social media conglomerate.
Projections suggest Meta could report earnings of $4.36 per share in Q1 2024, reflecting a staggering 98% surge from the prior year. Revenue estimates stand at $36.2 billion, up 26.3% on a yearly basis.
Given these compelling figures, Meta’s CEO is likely to provide a positive outlook for the subsequent quarter, leveraging the company’s expanding user base and innovative AI ventures, including the transformative Advantage+ ad sales platform.
As of the recent close at $481.07, Meta boasts a market capitalization of $1.22 trillion, positioning it as the sixth largest US-listed company.
With META stock witnessing a robust 125% surge over the trailing 12 months, paralleling the broader tech sector’s gains, investors see Meta as a stalwart with strong financial fundamentals.
Forecast for Tesla Stock:
Conversely, Tesla faces a challenging week ahead, with projections hinting at lackluster earnings and a somber outlook amid several headwinds impeding the electric vehicle manufacturer.
Tesla’s Q1 update is scheduled post-market on Tuesday, followed by a critical analyst call. Buoyed by near-term challenges, 14 out of 15 surveyed analysts have reduced their EPS estimates owing to a substantial drop from initial forecasts.
Expected to experience a notable price swing post-earnings, Tesla’s shares endured a nearly 13% decline after the last report, marking the fourth consecutive post-earnings selloff.
Analysts predict Tesla to report earnings of $0.50 per share in Q1 2024, marking a 41.2% decrease year-over-year. Revenue is anticipated to shrink by 4.3% to $22.3 billion, with pressures mounting on automotive gross margins due to ongoing price cuts.
Struggling with demand uncertainties and increased competition, Tesla’s future guidance might rouse investor concerns amidst a complex macroeconomic backdrop and diminishing operating margins.
With Tesla closing at $147.05 on Friday, its market valuation stands at $469 billion, portraying a challenging year-to-date performance with a 40.8% decline.
Noted for its fragile financial metrics, including weak gross profits and dwindling earnings growth, Tesla remains under scrutiny, magnified by its lofty valuation metrics.
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Disclosure: The opinions expressed here are the author’s alone and do not constitute financial advice. The author may have positions in the S&P 500 and associated ETFs.
The author periodically rebalances their investment portfolio based on ongoing risk assessments and financial analysis.
Readers are advised to conduct their research or consult with a financial advisor before making any investment decisions.