Diverging Trends
It’s a jam-packed week for economic releases and earnings announcements. The aggregated data across all reports will provide a snapshot of the strength of the US economy.
Last Thursday, an American Express (AXP) report highlighted two interesting trends. While spending on travel and entertainment in the quarter jumped 39%, the company also set aside $1.1 billion in loan loss provisions. CEO Stephen Squeri noted there is some stress at the lower end of the economy, therefore financial institutions are preparing for defaults.
Credit card giants Visa (V) and Mastercard (MA), which release results on Tuesday and Thursday this week, have a unique perspective of the spending habits of millions of consumers. Investors will have their eyes peeled, looking to compare these reports to the Amex figures released last week.
American Express’ report, along with these upcoming announcements from Visa and Mastercard, will highlight the state of consumer finances. Wall Street will be comparing all three to see if any worrisome trends are emerging.
Economic News
Tomorrow will feature plenty of housing updates, with the release of new home sales data as well as the Case Shiller index. This home price metric rose 2.5% year-over-year in January, the smallest increase seen since 2019. Meanwhile, new home sales in February increased 1.1% month-over-month to 640,000.
On Wednesday, reports for durable goods orders and the goods trade balance will be released. Notably, the US trade deficit widened to $91.6 billion in February due to a rising cost of living and higher borrowing costs. Investors will also get an update on the 30-year fixed-mortgage rate, which currently sits at 6.43%.
On Thursday, the growth rate for America’s GDP will be released for Q1 of this year. During the last quarter of 2022, the economy expanded 2.6%. Investors will also get updates for initial jobless claims and pending home sales.
On Friday, information on personal income and spending for March will be released. These metrics rose 0.3% and 0.2% month-over-month in February, respectively.
Earnings Data
Today, Coca-Cola (KO) will lead off the busy week of earnings. It is the first of many companies in the Dow Jones Industrial Index to report earnings.
Tomorrow is the busiest day of the week, with reports expected from — deep breath — Alphabet (GOOGL), 3M (MMM), Chipotle (CMG), Microsoft (MSFT), McDonald’s (MCD), Raytheon (RTX), UPS (UPS), and Spotify (SPOT). Investor’s eyes will be trained on Microsoft and Google in particular for updates related to ChatGPT, Bard, and the future of artificial intelligence.
On Wednesday, Meta Platforms (META), Boeing (BA), and Roku (ROKU) will offer updates on their businesses. The last will likely discuss its recent rollout of Roku TVs.
On Thursday, two more Dow Jones companies, Caterpillar (CAT) and Honeywell (HON), will report. Plus, Amazon (AMZN) CEO Andy Jassy will expand on his plan to cut costs, which may include more layoffs, in addition to the 27,000 workers that Amazon has already let go of this year.
On Friday, the massive consumer goods company Colgate-Palmolive (CL) will round out the week, along with oil goliaths Exxon Mobil (XOM) and Chevron (CVX). Oil companies had a record year in 2022, so investors will be eager to see if this momentum has continued into 2023.
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