Investors are hoping a flood of US quarterly reports next week, including those from megacap growth titans, will confirm a solid profit outlook for corporate America and bolster the case for stocks after a rocky start to the year.
Nearly 180 companies in the S&P 500, worth roughly half of the benchmark index's market value, are scheduled to report results. They include the four biggest US companies by market capitalisation: Apple, Microsoft, Amazon and Google parent Alphabet.
The latest round of earnings comes against a backdrop of hawkishness from the Federal Reserve and a rapid rise in bond yields that has sparked unease about whether policymakers will damage the economy as they fight the worst inflation in nearly four decades.
The S&P 500 has moved lower in April and was down 10.4 per cent so far this year after a sharp sell-off on Friday.
With monetary policy weighing on stocks, bullish investors are counting on a solid corporate outlook to support markets, increasing pressure on companies to report solid bottom-line results and forecasts. S&P 500 companies are estimated to increase earnings by 9 per cent this year, according to Refinitiv data.
“It’s probably the strongest argument you can make for owning stocks at this point, that corporate profits are still very robust,” said Charlie Ryan, portfolio manager at Evercore Wealth Management. “Any degradation in corporate profit growth and the cadence of that would spook the market.”
So far, investors have been quick to punish shares of companies with disappointing results, particularly those that carry expensive valuations. One recent casualty has been Netflix, whose shares tumbled about 35 per cent in a single session after the streaming company reported its first drop in subscriber numbers in a decade.
Although stocks have declined year-to-date, the S&P 500 still has been trading at about 19 times forward earnings estimates, above its long-term average of 15.5 times.
“We are in a show-me type of environment. I think next week is critical for tech and high growth names, especially the higher valuation stocks,” said Anthony Saglimbene, global market strategist at Ameriprise. “They better prove that they deserve these multiples right now.”
Investors will zero-in on results from Apple, Microsoft, Amazon and Alphabet, which combined have a market value of about $8 trillion and make up one-fifth of the weight of the S&P 500. All of those megacap stocks have declined this year, with Apple down about 9 per cent, Amazon off 13.4 per cent, Alphabet down 17.4 per cent and Microsoft falling 18.5 per cent.
We are in a show-me type of environment. I think next week is critical for tech and high growth names, especially the higher valuation stocks. They better prove that they deserve these multiples right now
Anthony Saglimbene,
global market strategist at Ameriprise
Earnings expectations for these companies are subdued for the quarter ended in March. Microsoft is expected to have increased adjusted earnings per share by 12 per cent from the year-earlier period, Apple by 2 per cent, while Alphabet is forecast to post a 0.7 per cent dip and Amazon reporting a 49 per cent drop, according to Refinitiv data.
S&P 500 companies overall are expected to increase quarterly earnings by 7.3 per cent.
“Expectations are low, but that doesn’t mean it’s not important,” said James Ragan, director of wealth management research at DA Davidson.
“If we are going to hit that 9 per cent [earnings growth] for the year or even better than that, it’s hard to imagine we are going to do that without having better-than-expected earnings from the megacap companies.”
Aside from the top four firms, results are due next week from companies including Facebook owner Meta Platforms, payment companies Visa and MasterCard, oil majors Chevron and Exxon Mobil, and consumer companies Coca-Cola and PepsiCo.
Beyond the bottom line results and financial outlooks, investors also will be looking to see if companies can maintain their profit margins as inflation threatens to drive up their input costs.
S&P 500 companies should expect net income margins to dip to about 13 per cent in 2022 from a record 13.4 per cent last year, JP Morgan said in a note this week.
Of 99 S&P 500 companies that have reported so far, 77.8 per cent reported earnings above analysts expectations, Refinitiv said. That rate is above the typical beat rate of 66 per cent for a quarter since 1994, but below the 83 per cent rate over the past four quarters.
“The stock market is … waiting for this barrage of earnings,” Mr Saglimbene said. The market is “beholden to what companies say about the second quarter and beyond.”
Killing of Qassem Suleimani
Killing of Qassem Suleimani
Tips on buying property during a pandemic
Islay Robinson, group chief executive of mortgage broker Enness Global, offers his advice on buying property in today's market.
While many have been quick to call a market collapse, this simply isn’t what we’re seeing on the ground. Many pockets of the global property market, including London and the UAE, continue to be compelling locations to invest in real estate.
While an air of uncertainty remains, the outlook is far better than anyone could have predicted. However, it is still important to consider the wider threat posed by Covid-19 when buying bricks and mortar.
Anything with outside space, gardens and private entrances is a must and these property features will see your investment keep its value should the pandemic drag on. In contrast, flats and particularly high-rise developments are falling in popularity and investors should avoid them at all costs.
Attractive investment property can be hard to find amid strong demand and heightened buyer activity. When you do find one, be prepared to move hard and fast to secure it. If you have your finances in order, this shouldn’t be an issue.
Lenders continue to lend and rates remain at an all-time low, so utilise this. There is no point in tying up cash when you can keep this liquidity to maximise other opportunities.
Keep your head and, as always when investing, take the long-term view. External factors such as coronavirus or Brexit will present challenges in the short-term, but the long-term outlook remains strong.
Finally, keep an eye on your currency. Whenever currency fluctuations favour foreign buyers, you can bet that demand will increase, as they act to secure what is essentially a discounted property.
Killing of Qassem Suleimani
The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
LUKA CHUPPI
Director: Laxman Utekar
Producer: Maddock Films, Jio Cinema
Cast: Kartik Aaryan, Kriti Sanon, Pankaj Tripathi, Vinay Pathak, Aparshakti Khurana
Rating: 3/5
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Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
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Zayed Sustainability Prize
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
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UAE currency: the story behind the money in your pockets
Temple numbers
Expected completion: 2022
Height: 24 meters
Ground floor banquet hall: 370 square metres to accommodate about 750 people
Ground floor multipurpose hall: 92 square metres for up to 200 people
First floor main Prayer Hall: 465 square metres to hold 1,500 people at a time
First floor terrace areas: 2,30 square metres
Temple will be spread over 6,900 square metres
Structure includes two basements, ground and first floor
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Another way to earn air miles
In addition to the Emirates and Etihad programmes, there is the Air Miles Middle East card, which offers members the ability to choose any airline, has no black-out dates and no restrictions on seat availability. Air Miles is linked up to HSBC credit cards and can also be earned through retail partners such as Spinneys, Sharaf DG and The Toy Store.
An Emirates Dubai-London round-trip ticket costs 180,000 miles on the Air Miles website. But customers earn these ‘miles’ at a much faster rate than airline miles. Adidas offers two air miles per Dh1 spent. Air Miles has partnerships with websites as well, so booking.com and agoda.com offer three miles per Dh1 spent.
“If you use your HSBC credit card when shopping at our partners, you are able to earn Air Miles twice which will mean you can get that flight reward faster and for less spend,” says Paul Lacey, the managing director for Europe, Middle East and India for Aimia, which owns and operates Air Miles Middle East.
LOS ANGELES GALAXY 2 MANCHESTER UNITED 5
Galaxy: Dos Santos (79', 88')
United: Rashford (2', 20'), Fellaini (26'), Mkhitaryan (67'), Martial (72')
Allardyce's management career
Clubs (10) - Limerick (1991-1992), Perston North End (1992), Blackpool (1994-1996), Notts County (1997-1999), Bolton Wanderers (1999-2007), Newcastle United (2007-2008), Blackburn Rovers (2008-2010), West Ham United (2011-2015), Sunderland (2016), Crystal Palace (2016-2017)
Countries (1) - England (2016)
World record transfers
1. Kylian Mbappe - to Real Madrid in 2017/18 - €180 million (Dh770.4m - if a deal goes through)
2. Paul Pogba - to Manchester United in 2016/17 - €105m
3. Gareth Bale - to Real Madrid in 2013/14 - €101m
4. Cristiano Ronaldo - to Real Madrid in 2009/10 - €94m
5. Gonzalo Higuain - to Juventus in 2016/17 - €90m
6. Neymar - to Barcelona in 2013/14 - €88.2m
7. Romelu Lukaku - to Manchester United in 2017/18 - €84.7m
8. Luis Suarez - to Barcelona in 2014/15 - €81.72m
9. Angel di Maria - to Manchester United in 2014/15 - €75m
10. James Rodriguez - to Real Madrid in 2014/15 - €75m
Fitness problems in men's tennis
Andy Murray - hip
Novak Djokovic - elbow
Roger Federer - back
Stan Wawrinka - knee
Kei Nishikori - wrist
Marin Cilic - adductor
Fitness problems in men's tennis
Andy Murray - hip
Novak Djokovic - elbow
Roger Federer - back
Stan Wawrinka - knee
Kei Nishikori - wrist
Marin Cilic - adductor
Indoor cricket in a nutshell
Indoor cricket in a nutshell
Indoor Cricket World Cup - Sept 16-20, Insportz, Dubai
16 Indoor cricket matches are 16 overs per side
8 There are eight players per team
9 There have been nine Indoor Cricket World Cups for men. Australia have won every one.
5 Five runs are deducted from the score when a wickets falls
4 Batsmen bat in pairs, facing four overs per partnership
Scoring In indoor cricket, runs are scored by way of both physical and bonus runs. Physical runs are scored by both batsmen completing a run from one crease to the other. Bonus runs are scored when the ball hits a net in different zones, but only when at least one physical run is score.
Zones
A Front net, behind the striker and wicketkeeper: 0 runs
B Side nets, between the striker and halfway down the pitch: 1 run
C Side nets between halfway and the bowlers end: 2 runs
D Back net: 4 runs on the bounce, 6 runs on the full
UAE currency: the story behind the money in your pockets
SERIE A FIXTURES
All times UAE ( 4 GMT)
Saturday
Roma v Udinese (5pm)
SPAL v Napoli (8pm)
Juventus v Torino (10.45pm)
Sunday
Sampdoria v AC Milan (2.30pm)
Inter Milan v Genoa (5pm)
Crotone v Benevento (5pm)
Verona v Lazio (5pm)
Cagliari v Chievo (5pm)
Sassuolo v Bologna (8pm)
Fiorentina v Atalanta (10.45pm)
Mohammed bin Zayed Majlis
Farage on Muslim Brotherhood
Nigel Farage told Reform's annual conference that the party will proscribe the Muslim Brotherhood if he becomes Prime Minister.
"We will stop dangerous organisations with links to terrorism operating in our country," he said. "Quite why we've been so gutless about this – both Labour and Conservative – I don't know.
“All across the Middle East, countries have banned and proscribed the Muslim Brotherhood as a dangerous organisation. We will do the very same.”
It is 10 years since a ground-breaking report into the Muslim Brotherhood by Sir John Jenkins.
Among the former diplomat's findings was an assessment that “the use of extreme violence in the pursuit of the perfect Islamic society” has “never been institutionally disowned” by the movement.
The prime minister at the time, David Cameron, who commissioned the report, said membership or association with the Muslim Brotherhood was a "possible indicator of extremism" but it would not be banned.
How tumultuous protests grew
- A fuel tax protest by French drivers appealed to wider anti-government sentiment
- Unlike previous French demonstrations there was no trade union or organised movement involved
- Demonstrators responded to online petitions and flooded squares to block traffic
- At its height there were almost 300,000 on the streets in support
- Named after the high visibility jackets that drivers must keep in cars
- Clashes soon turned violent as thousands fought with police at cordons
- An estimated two dozen people lost eyes and many others were admitted to hospital
WHAT IS GRAPHENE?
It was discovered in 2004, when Russian-born Manchester scientists Andrei Geim and Kostya Novoselov were experimenting with sticky tape and graphite, the material used as lead in pencils.
Placing the tape on the graphite and peeling it, they managed to rip off thin flakes of carbon. In the beginning they got flakes consisting of many layers of graphene. But when they repeated the process many times, the flakes got thinner.
By separating the graphite fragments repeatedly, they managed to create flakes that were just one atom thick. Their experiment led to graphene being isolated for the very first time.
In 2010, Geim and Novoselov were awarded the Nobel Prize for Physics.
The team
Videographer: Jear Velasquez
Photography: Romeo Perez
Fashion director: Sarah Maisey
Make-up: Gulum Erzincan at Art Factory
Models: Meti and Clinton at MMG
Video assistant: Zanong Maget
Social media: Fatima Al Mahmoud
