What you need to know this week

The rat race in the markets is set to continue this week, with investors in store for a slew of big profits and new readings on key unemployment data in Washington, including the ever-important monthly jobs report.

Monday kicks off a pivotal week in earnings season, with more than 100 S&P 500 companies set to report fourth-quarter results through Friday. Most notably, investors will listen to presentations from Amazon (AMZN), Facebook now Meta Platforms (FB) and Alphabet (GOOG, GOOGL), three of the five heavyweight companies that account for around a quarter of total market capitalization. of the benchmark index. .

Amazon is expected to release numbers for the last three months of 2021 after the bell on Thursday. Analysts expect adjusted earnings per share of $3.89 on revenue of $137.87 billion. With the stock down 15.5% year-to-date at Friday’s close, a look at fourth-quarter performance could be a watershed moment for the e-commerce giant as markets reassess tech valuations. .

Facebook, now known as Meta Platforms, has also come under pressure in recent weeks amid a massive sell-off in tech stocks. Investors will likely get more details on the company’s progress on its Oculus virtual reality headset when it reports Tuesday, which stock watchers say could give the social media platform a much-needed boost. Facebook is expected to report earnings of $3.83 per share, on revenue of $33.44 billion, according to Bloomberg consensus estimates.

Alphabet’s results, due for release Tuesday, are expected to show adjusted earnings per share of $27.45 on revenue of $59.38 billion. Also bearing the brunt of the tech rout, Alphabet shares are down 8% year-to-date. Stock watchers will be tuning in to get a sense of the momentum behind its cloud platform, a component that has been a big contributor to the company’s growth and could help the stock rebound.

On the economic front, employment data will be in the spotlight this week. The Department of Labor’s monthly jobs report due out on Friday will offer an updated look at the strength of hiring and labor force participation — important measures of the U.S. economy, made even more important these days. recent weeks as the impact of the latest Omicron piloted wave begins to show in the latest surveys. Economists expect private employers to add 150,000 jobs in January, less than the previous month. The jobless rate is expected to remain unchanged from December at 3.9%, according to Bloomberg consensus estimates.

Even though the spread of Omicron may slow, payrolls will likely be a bit slower to react to falling COVID-19 cases than real-time activity data, according to Pantheon Macroeconomics chief economist Ian Shepherdson.

“The spike in COVID cases has created new headwinds for the economy even as tailwinds, including fiscal stimulus from the federal government, fade,” said Bankrate senior economic analyst Mark Hamrick. , in a footnote.

“The detrimental combination of supply chain constraints and the shortage or unavailability of workers amid Omicron’s ramp-up is weighing on the country’s economic recovery,” adding that under the circumstances, “it is hard to argue for a huge ramp up to hire this month.

Volatile end of month for equities

Federal Reserve anxiety created a volatile January for stocks. The S&P 500 is poised to end the month down 7% and 8% from its all-time high as traders adjust to the reality of a more aggressive central bank and rising pace of stocks. interest rate faster than originally expected.

Stocks tumbled last week after Jerome Powell’s remarks following the Fed’s two-day policymaking meeting that strongly signaled interest rates taking off above near current levels. zero that is expected to occur in March as policymakers seek to tighten financial conditions amid runaway inflation.

“Any time the Fed goes from very easy to starting to tighten, there’s always uncertainty, but it’s been a trying week,” said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute, to Yahoo Finance Live, adding that every day has been a battle for the 200-day moving average in the S&P 500.

Powell, striking his most hawkish tone yet, prompted even top Fed watchers to step up sharply and revise their calls for a rate hike: Bank of America released one of the most aggressive forecasts in the rue, outlining expectations of seven hikes this year, while JPMorgan revised up its outlook from four to five hikes. On Saturday, Goldman Sachs revised its forecast for interest rate hikes to five times from four this year.

Charles Schwab’s chief fixed income strategist, Kathy Jones, told Yahoo Finance Live, however, it’s “premature” to talk about much more than three until the Fed offers more clarity. on how it will use its balance sheet to tighten policy.

“Some of the estimates are just way ahead of reality at this point in the game,” she said.

As investors buckle up for swing after swing, TKer’s Sam Ro points out that ‘heartbreaking selling is normal:’ The S&P 500 sees three selling of 5% or more in an average year, with the average annual pullback maximum – or biggest intra-annual selloff – at 14%, making even the sharpest of benchmark index swings in recent weeks “well within the realm of average.”

Economic calendar

  • Monday: MNI Chicago PMI, January (61.8 expected, 63.1 before, revised up to 64.3); Dallas Fed Manf. Activity, January (8.5 expected, 8.1 before)

  • Tuesday: Markit US Manufacturing PMI, Final January (55.0 expected, 55.0 before); Construction spending, month-over-month, December (0.6% expected, 0.4% in prior month); ISM New Orders, January (60.4% prior month, revised up to 61.0%); ISM manufacturing, January (57.5 expected, 58.7 in previous month, revised up to 58.8); ISM Employment, January (54.2 the previous month, revised down to 53.9); ISM prices paid, January (67.0 expected, 68.2 the previous month); JOLTS job openings, December (10.3 million the previous month); Total WARDS vehicle sales, January (12.7 million expected, 12.44 million prior month)

  • Wednesday: MBA mortgage applications, week ended Jan. 28 (-7.1% over the previous week); Change in ADP employment, January (200,000 expected, 807,000 the previous month)

  • Thusday: Challenger job cuts, year-over-year, January (-75.3% before); Unit labor costs, preliminary data for the fourth quarter (1.0% expected, 9.6% in the previous quarter); Non-farm productivity, preliminary data for the fourth quarter (3.2% expected, -5.2% expected); Initial unemployment claims, week ended Jan. 29 (250,000 expected, 260,000 in previous week); Continuing claims, week ended Jan 22 (expected 1.6 million, 1.675 million in previous week); Markit US Services PMI, January Final (50.9 expected, 50.9 prior month); Markit US Composite PMI, January final (50.8 expected, 50.8 the previous month); ISM services index, January (59.0 expected, 62.0 before); Durable goods orders, final December (-0.9% before ); Factory orders excluding transport, December (0.8% final) Durable goods excluding transport, December final (0.4% before); Capital goods orders Non-defense excluding aircraft, final December (0.0%); Shipments of capital goods Non-defense excluding aircraft, final December (1.3%)

  • Friday: Revisions – Employment report, establishment survey; Net revision of the wage bill over two months, January (141,000 previously); Evolution of the private wage bill, January (150,000 expected, 211,000 the previous month); Change in the wage bill in the manufacturing sector, January (20,000 expected, 27,000 the previous month); Unemployment rate, January (3.9% expected, 3.9% before); Average hourly earnings, month over month, January (0.5% expected, 0.6% the previous month); Average Hourly Earnings, Year-over-Year, January (5.2% expected, 4.7% prior month); Average weekly hours of all employees, January (34.7 forecast, 34.7 the previous month); Labor force participation rate, January (61.9% expected, 61.9% the previous month); Underemployment rate, January (7.3% the previous month)

Earnings Calendar

  • Monday: Otis WorldWide (OTIS) before market open, NXP Semiconductors (NXPI) after market close, Cirrus Logic (CRUS) at market close

  • Tuesday: UPS (UPS) before market open, Sirius XM (SIRI) before market open, Alphabet (GOOG) after market close, General Motors (GM) at market close, Starbucks (SBUX) after market close, AMD (AMD) after market close, PayPal Holdings (PYPL) after market close, Match Group (MTCH) after market close and Electronic Arts (EA) after market close, Gilead (GILD ) after market close

  • Wednesday: AmerisourceBergen (ABC) before market open, AbbVie (ABBV) before market open, Humana (HUM), ThermoFisher Scientific (TMO), Marathon Petroleum (MPC) before market open, T-Mobile (TMUS ) after market close, Qualcomm (QCOM) after market, Meta Platforms (FB) after market, Boston Scientific (BSX) after market

  • Thusday: Merck (MRK) before market opening, Eli Lilly & Co. (LLY) before market opening, HoneyWell (HON) before market opening, Estee Lauder (EL) before market opening, Cardinal Health (CAH) before market opening , Shell plc (RDS -b) pre-market, Cigna (CI) pre-market, Amazon (AMZN) pre-market, Ford (F) pre-market, Snap (SNAP) pre-market, Pinterest (PINS) pre-market, Blizzard Activation (ATVI ) before market open, Skechers (SKX) before market open, GoPro (GPRO) before market open, Fortinet (FTNT) before market open, News Corp. (NWSA) before market opening, Unity Software (U) before market opening

  • Friday: Wynn Resorts (WYNN), Bristol-Myers (BMY) before market opening, Regeneron (REGN) before market opening, Aon (AON) before market opening, Royal Caribbean Cruises (RCL), Eaton (ETN), CBOE Global Markets (CBOE)

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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