Middle East, House Leadership Cloud Stock Market Outlook With Amazon, Microsoft, Meta And Alphabet To Report

Clouds figure prominently in the coming week’s stock market action. Cloud service providers Amazon.com (AMZN), Microsoft (MSFT) and Alphabet (GOOGL) report earnings. Stock market action is increasingly clouded by steepening pullbacks in the major market indexes. Threatening clouds hang over far too many lives in Israel and Palestine, as well as a host of markets and industries, as the Middle East seeks a way out of its new war. And the outlook in Washington has grown even more cloudy, as the House of Representatives fumbles for leadership ahead of a mid-November deadline.

That’s a lot of heaped up uncertainty as the market swings full-bore into the third-quarter reporting season. Below are a few guideposts to the week’s action. Put them to good use.

Stocks To Watch: Keep A Tight Rein On Capital

Investors should be looking for stocks holding up well near buy points, though it’s not a great time to add exposure. Adobe (ADBE), UnitedHealth (UNH), SLB (SLB), Costco Wholesale (COST) and Fair Isaac (FICO) all fit the bill. As an added bonus, none plan to report earnings for at least the next two weeks. (UNH and SLB recently reported.) Adobe has a flat base on a weekly chart. UNH is moving up the right side of a base, likely to complete a handle on Friday. SLB also has a flat base, and Wednesday’s high marks an early entry. Costco and Fair Isaac are right around buy points. Adobe and Fair Isaac boast the strongest relative strength ratings in the group, each weighing in with a 97 rating.

Economic Calendar: More Goldilocks Data For The Fed

The coming week will likely bring more economic data that’s way too hot for the Fed’s comfort. Another brush with a 5% 10-year Treasury yield should be expected. If there’s any consolation, it’s that the data is mostly backward looking, since the 10-year yield’s big breakout — which should be a drag on big-ticket purchases like autos — didn’t come until Sept. 21. The highlight will be the first official estimate of Q3 GDP growth, out Thursday at 8:30 a.m. ET, which is expected to top 4%, fueled by an acceleration in consumer spending.

Fed Chair Powell Admits Role In 10-Year Treasury Yield’s Surge As S&P 500 Slides

Initial jobless claims, which fell to an eight-month low in the week through Oct. 14, and durable goods orders, a window into capital spending strength, also come out Thursday at 8:30 a.m. Friday’s personal income and outlays data for September, out at 8:30 a.m., will show how the Fed’s primary inflation rate, the core PCE price index, finished the quarter. After three tame months through August, economists are expecting an accelerated 0.3% rise.

New home sales for September will be reported Wednesday at 10 a.m., while pending home sales, which provides an advance look at existing home sales ahead of closing, are due Thursday at 10 a.m. The preliminary S&P Global purchasing managers index for October, offering an early read on both manufacturing and services activity this month, is out Tuesday at 9:45 a.m.

Microsoft Earnings: Cloud, Office 365 and Artificial Intelligence

Software giant Microsoft plans to report its fiscal first-quarter results late Tuesday. Analysts polled by FactSet expect Microsoft to earn $2.65 a share, up 13% year over year. Microsoft sales are seen climbing 9% to $54.5 billion in the September quarter. Key focus areas for the report will be Microsoft’s cloud computing businesses, including Azure infrastructure services and Office 365 productivity software. Wall Street also will be looking for growth in Microsoft’s artificial intelligence offerings. The fiscal Q1 report will be the company’s first since it closed its $69 billion acquisition of video game publisher Activision Blizzard.

Meta-Earnings: Facing Off With The Doubters

Expectations are high ahead of Q3 earnings for Meta (META), a top performer in S&P 500 with a 160% gain this year. The social media giant will announce earnings Oct. 25, after the market closes. Analysts expect earnings of $3.64 per share on revenue of $33.6 billion, according to FactSet. That’s a 122% earnings increase and 21% sales increase. Meta stock is in a buy range after a move past an early entry point of 312.87 on Oct. 6.

Analysts will be looking for signs of continued advertising recovery and momentum in monetizing the short-video Reels product. There will also be an eye on operating expenses, as well as losses from the metaverse-focused Reality Labs division. “Although investors are concerned FY24 opex (operating expenses) guidance could be elevated at 20% YoY growth, we believe the probability is low given the narrow product road map of metaverse and head count not likely to accelerate meaningfully,” Mizuho analyst James Lee wrote in a recent client note. Mizuho gave Meta a buy rating and 400 price target. 

Amazon Earnings: A Pullback Ahead Of A High Hurdle

Amazon reports third-quarter earnings after the market closes Thursday. There will be a close eye on the recovery for its AWS cloud business and expectations for holiday shopping in Q4. Analysts project the company will report earnings of 58 cents per share on revenue of $141.5 billion, according to FactSet. Annually, that’s an earnings increase of 107% and a sales increase of 11.3%. AMZN stock is up nearly 60% on the year but has scuffled with a 5% loss since September. Analysts largely hold buy ratings for AMZN stock ahead of earnings. Wedbush said Amazon has catalysts ahead “as retail margins continue to rise and AWS growth accelerates against easing comps.”

Big Oil Earnings: A View To Supply Chains and Outlooks

Energy giants ExxonMobil (XOM) and Chevron (CVX) report third-quarter earnings and revenue early Friday as the Middle East’s Israel-Hamas war clouds the oil market outlook. ExxonMobil, fresh off announcing its $60 billion grab of Pioneer Natural Resources (PXD), is expected to see earnings fall 46% to $2.37 per share. The oil major’s revenue is also projected to decline 17% to $93.41 billion. Meanwhile, Wall Street forecasts Chevron EPS contracting 35% to $3.60 with sales decreasing 23% to $51.38 billion.

Both ExxonMobil and Chevron saw record profit in 2022 on the back of surging oil and natural gas prices. While prices have come down in 2023 the war in the Middle East is making traders assess the global oil supply as the U.S. weighs increased sanctions against Iran. Meanwhile, there are also concerns that if the war escalates it could disrupt oil supply. Last week, Israel ordered Chevron to shut down natural-gas production at one of its two major offshore platforms in the eastern Mediterranean.

ExxonMobil, Halliburton Lead Rally As Oil Heads Higher. War Premium, Consolidation, Sanctions All In Play

Alphabet Q3: Earnings And Allegations

Google-parent Alphabet (GOOGL) reports Q3 earnings Oct. 24. Analysts predict EPS of $1.37, up 29% from a year earlier. Revenue is expected to rise 4.3% to $72.06 billion. GOOGL stock has held up amid the Justice Department’s nonjury antitrust trial vs. Alphabet. The government alleges Google maintains an internet search monopoly “through exclusionary distribution agreements that steer billions of search queries to Google each day.” One issue involves Google’s contract with Apple (AAPL) which makes Google the default search engine on its Safari web browser.

Monday

Cadence Design Systems (CDNS), a maker of electronic design automation software, will post its third-quarter results late Monday. Analysts expect Cadence to earn $1.20 a share, up 13% year over year, on sales of $1 billion, up 11%.

Logitech (LOGI) plans to release its fiscal second-quarter results late Monday. Wall Street predicts the computer peripherals maker will earn 59 cents a share, down 30% from the same period last year. Logitech sales are seen declining 15% to $973 million.

Tuesday

General Electric (GE) reports early Tuesday. Analysts expect GE earnings of 56 cents a share on revenue of $15.511 billion, according to FactSet. Year-over-year comparisons are muddied by a health-care spinoff. GE plans to spin out its power and renewable energy unit, as GE Vernova, in early 2024. That will allow the “new GE” to emerge as an independent, aerospace-focused company. Investors will watch for progress in onshore wind and how near it is to breaking even, as GE’s big breakup nears the finish line. GE stock has formed a flat base with a 117.96 buy point.

Halliburton (HAL) reports Q3 earnings and revenue before the market opens Tuesday. Analysts project profit growing 28% to 77 cents per share and sales increasing 9% to $5.85 billion. HAL has averaged 88% EPS growth over the past three quarters with full-year earnings expected to increase 40%.

General Motors (GM) reports for the third quarter early Tuesday. Analysts project a 17% EPS decline on a 1% revenue gain. That would mark the lowest sales growth in seven quarters. GM should see little impact from the UAW strike, which began Sept. 15, in the final weeks of Q3. But analysts fear supply challenges are turning into demand issues amid high inflation and interest rates. With macro uncertainty high, both GM and Ford have pared back investments in electric vehicles and battery plants as well. Updates will be watched.

Visa (V) announces Q4 results late Tuesday. Analysts expect the credit card giant to report a 16.6% earnings increase to $2.25 per share on 10% revenue growth to $8.57 billion. V stock is trading in a flat base with a 250.06 buy point.

Snapchat parent-company Snap (SNAP) reports Q3 earnings after the stock market closes on Tuesday. Analysts expect the company to post an adjusted loss of 4 cents a share on sales of $1.1 billion, according to FactSet. That’s a 150% earnings decrease from last year and 1.6% sales decrease.

Range Resources (RRC) announces third-quarter earnings and revenue late Tuesday. Wall Street forecasts EPS sinking 74% to 35 cents with revenue tumbling 37% to $615 million. The natural gas producer has averaged a 19% earnings decline over the past three quarters as…