Earnings season commences and 2 other things to watch in the market next week
Several bellwether stocks including Pepsi and Delta report earnings. Also, oil edges higher, and crypto dealers surrender.
The major indexes made a comeback this week, coming off what was the worst five-day stretch for the S&P 500 since 2020.
At the time of this writing Friday afternoon, the S&P 500 was up over 2% and the Nasdaq Composite was closing in on a 3% gain. Meanwhile, the Dow Jones Industrial Average was up just under 2%.
As we look into the week ahead, here are three things to watch in the stock market that could affect your portfolios.
1. Earnings roundup
Earnings season for the quarter kicks off next week, the first major test for the stock market in the second half of the year. The things to watch for?
- How companies have navigated soaring inflation
- The impacts of exchange rate volatility
- Shifts in consumer spending
- The ongoing constraints in the supply landscape
- How companies guide to the back half of 2022
As we dip into earnings season next week, we’ll get a look at the financials of some prominent companies, which could move some closely watched stocks.
PepsiCo (PEP) and Delta Air Lines (DAL) report midweek. Deutsche Bank analyst Steve Powers recently warned of a challenging second-quarter setup ahead of PepsiCo’s earnings release, saying high inflation is pinching consumers across the US, Eurozone and emerging markets, according to Yahoo Finance. Powers maintained a Hold rating on the stock but lifted his price target from $175 to $178.
Meanwhile, Delta Air Lines is expected to deliver a year-over-year increase in earnings on higher revenues when it reports Wednesday.
In the latter half of the week, Taiwan Semiconductor Manufacturing (TSM) and several major banks report. On Friday, Taiwan Semiconductor, Apple’s (AAPL) most important chipmaker, reported an 18.5% year-over-year increase in sales and analysts expect the company to report higher earnings next week.
But banks will be the biggest theme for next week, with most major US banks reporting on Friday. Investors anxious about a looming recession might look to these banks’ earnings for guidance.
Tuesday, July 12
Wednesday, July 13
Thursday, July 14
Friday, July 15
- US Bancorp (USB)
- Bank of New York Mellon (BK)
- BlackRock (BLK)
- Wells Fargo (WFC)
- State Street (STT)
- Citigroup (C)
- PNC Financial Services Group (PNC)
- UnitedHealth Group (UNH)
2. Which way will oil go?
Oil prices have been trading in a channel between about $95 and $125 since late February. After about a month of declines, prices of crude on Tuesday fell below the $100 mark on fears of recession concerns, dragging down shares of several oil companies. They’re back on the rise, as investors returned their focus to the tight supply.
Are oil prices heading higher again? Experts seem to think so.
“With Russian oil supplies set to drop as the year progresses and it runs out of Western parts to maintain fields, and with the rest of OPEC hopelessly uninvested in maintaining production capacity, I fear the days of $100 oil will be with us for some time yet,” said OANDA senior market analyst Jeffrey Halley, reported by CNBC.
The energy sector has been the biggest laggard in the stock market over the past month, down over 22%. But if oil prices make another leg up, you can bet oil stocks will follow.
3. Watch for more crypto dealer trouble
Cryptocurrency platform Voyager Digital announced early Wednesday that it had filed for bankruptcy, sending more cracks throughout the already-weakened crypto market. Investors should continue to track the crashing market and the toll it’s taking on players in the space.
Voyager’s chapter 11 petition, filed Tuesday, comes less than a month after the company signed a deal with crypto-billionaire Sam Bankman-Fried’s quantitative research firm Alameda Research to secure a line of credit to keep it afloat. Voyager suffered a big hit from the collapse of crypto hedge fund Three Arrows Capital, which defaulted on its loans from Voyager and a variety of other crypto industry firms.
Singapore-based crypto lender Vauld on Monday paused all withdrawals, trading and deposits on its platform and is exploring a likely sale to Nexo.
I mentioned last week that investors likely wouldn’t have to wait long for more casualties of the so-called “crypto winter,” with Bankman-Fried saying more crypto companies were close to default.
Well, it’s happening. The question now is, who’s next?
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At the time of publication, Matt Miczulski owned shares of AAPL and WFC.
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