The markets have been experiencing a rough time this month, primarily due to inflation and geopolitical tensions. The S&P 500 and Nasdaq dropped for six consecutive days, with tech stocks being hit particularly hard. Investors are now expecting just one interest rate cut by the Federal Reserve this year, down from six earlier. Earnings season is now crucial for the market, with tech firms under pressure to deliver strong results to buoy risk appetite. Companies like Tesla, Meta, IBM, Microsoft, and Alphabet are reporting their first-quarter earnings this week.
Fortunately, earnings season has been strong so far, with positive surprises in both earnings per share and revenue expectations. The Magnificent Seven – massive tech stocks that carry a significant portion of market weight – are expected to drive overall earnings higher for the S&P 500. However, some economists are less certain about Big Tech’s performance this quarter, with expectations for slower growth compared to last year. Concerns over the hype surrounding artificial intelligence are also surfacing, calling for a skeptical approach towards companies touting AI without a clear path for its impact on results or margins.
In other news, Taylor Swift’s latest album, “The Tortured Poets Department,” has broken records, becoming the most-streamed album on Spotify, Amazon Music, and Apple Music on its first day. Tesla has announced aggressive price cuts in China, Germany, and the US in response to declining sales and increased competition in the EV market. These price cuts have impacted Tesla’s profit margins and caused its stock to decline, amidst a tough period for the company, with a significant drop in stock value year-to-date and job cuts announced. The market is closely watching Tesla’s first-quarter earnings report due out soon.
