Tech stocks under pressure, and 2 other things to watch in the market next week
Apple, Amazon disappoint, putting pressure on the tech sector. Also: Conflicted oil stocks and COVID vaccine players release earnings.
After rallying Thursday, the major indexes are poised to finish the last trading day of the month back in negative territory.
As of 10:38 a.m. ET Friday morning, every sector is deep in the red. The biggest underperformers on the S&P 500 are consumer discretionary, real estate and utilities, down 3.2%, 2.6% and 1.7%, respectively.
The Nasdaq Composite, the S&P 500 and the Dow Jones Industrial Average (DJIA) have fallen more than 1%.
Looking to the week ahead, here are three things to watch in the stock market that could affect your portfolio.
Tech is under pressure — again
Tech stocks led the market rally Thursday, with the Nasdaq ending the day up 3%, as investors praised a solid earnings report from Meta Platforms (FB). Shares of Meta Platforms jumped 14% in after-hours trading Wednesday on better-than-expected earnings and held onto the positive momentum to close out the week.
But not all technology stocks are created equal, and not all rallies last.
Shares of Apple (AAPL) are trading lower Friday after the company warned of a possible $8 billion blow in the current quarter from supply constraints. This comes as the company beat estimates with record second-quarter earnings.
Meanwhile, Amazon (AMZN) stock tumbled 10% in after-hours trading Thursday and more Friday after the company reported a nearly $4 billion quarterly loss. This was largely driven by a $7.6 billion loss from its investment in electric-vehicle (EV) company Rivian Automotive (RIVN). Excluding the Rivian loss, Amazon would have made a profit of $3.8 billion.
But the e-commerce giant also reported slowing growth in sales compared to the same quarter last year, and its growth could continue to slow in the current quarter. Shares of Amazon were down more than 12% Friday at the time of this writing.
Amazon wasn’t the only Big Tech company to report a slowdown in sales this quarter. Google parent company Alphabet (GOOGL) saw both its YouTube business and advertising revenue slow dramatically compared to last year, contributing to the tech slump earlier this week.
Investors were looking to these Big Tech stocks to signal a potential turnaround in the beaten-down Nasdaq, which fell to a new 2022 low of 12,430.90 on Wednesday. But data this week on corporate profits are instead showing signs of decelerating growth.
What’s next for oil stocks as oil prices trend higher?
Investors will be looking at both rising oil prices and earnings next week on the state of the energy sector.
Germany gets on board with Russian oil embargo
Oil prices are back on the rise after Germany signaled that it wouldn’t oppose a European Union embargo on Russian oil, according to the Wall Street Journal.
On Wednesday, German representatives to EU institutions withdrew the country’s objection to a full ban on Russian oil provided Berlin was given sufficient time to secure alternative supplies. As the EU’s largest economy, Germany has been one of the main opponents to a Russian oil boycott. Earlier in April, German employers and unions joined together to oppose the move, saying an embargo would lead to factory shutdowns and a significant loss of jobs, ABC News reported.
Oil stocks rallied Thursday on the news. But even with high oil prices, earnings have so far been mixed.
Big profits for big oil?
Exxon Mobil (XOM) and Chevron (CVX) reported mixed earnings Friday as crude oil prices remain above $100 a barrel. After oil prices surged following Russia’s invasion of Ukraine, investors have been eagerly awaiting earnings season to see just how much oil and gas companies may be benefitting from the global oil squeeze.
Last week, oil-services provider Halliburton (HAL) posted huge profits when the company reported its first-quarter financials, topping analysts’ expectations on both the top and bottom lines.
Next week, we’ll get a look at profits for a few more leading oil companies.
- Devon Energy (DVN). Scheduled to report Monday.
- BP plc (BP). Scheduled to report on Tuesday.
- Marathon Petroleum (MPC). Scheduled to report on Tuesday.
- Shell PLC (SHEL). Scheduled to report on Thursday.
- ConocoPhillips (COP). Scheduled to report on Thursday.
COVID stocks
COVID-19 vaccine stocks Pfizer (PFE) and Moderna (MRNA) are both slated to report first-quarter 2022 earnings next week — Pfizer on Tuesday and Moderna on Wednesday. Investors will get an idea of how these companies are doing now that global daily counts of new coronavirus cases, hospitalizations and deaths have moved back to pre-Omicron levels.
COVID stocks have largely fallen from the limelight since September 2021. Pfizer stock is trading at around 20% off its 52-week high. Meanwhile, shares of Moderna, BioNTech (BNTX) and Novavax (NVAX) are down 72%, 69% and 83%, respectively.
Both BioNTech and Novavax are expected to report first-quarter 2022 earnings on May 9.
On Friday, the Food and Drug Administration (FDA) announced that its independent advisors will meet in June to discuss Novavax’s COVID-19 vaccine for adults and Pfizer and Moderna’s shots for younger kids.
After nearly three months of declines, new coronavirus cases and hospitalizations in the US have been trending higher. According to US News, some experts are saying the US may be heading into another COVID-19 surge. Whether that will do anything for these struggling stocks remains to be seen.
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