Microsoft Corp., Tesla Inc. and Johnson & Johnson headline the first busy earnings week of 2023 as investors seek insight into the global economy amid mounting concerns over a potential recession.
They are among the more than 90 components of the S&P 500 that FactSet said are expected to report gains in the coming week.
Tesla finished the worst year in its stock’s history, losing roughly $675 billion in market valuation in 2022, the year CEO Elon Musk bought Twitter. But the reasons behind the sell-off go beyond the social media company. WSJ’s Sean McLain explained. Photo illustration: Amber Bragdon/Getty Images
The reports will show how companies are faring, as economists fear high interest rates will push the US economy into recession this year and companies are pessimistic about near-term growth. While prices remain high, there are signs that inflation has peaked, which could provide some relief for consumers.
Meanwhile, the tech industry is grappling with thousands of job cuts. Microsoft and Google parent Alphabet Inc. recently announced significant layoffs in their global workforces as they adjust to cooler growth.
“Over the past two years, we’ve seen periods of dramatic growth,” Alphabet chief executive officer Sundar Pichai wrote in a memo to employees on Friday. “To accommodate and drive that growth, we hired for a different economic reality than the one we face today.”
Microsoft and other tech companies are adjusting to cooler growth.
Photo: Jacob Kepler for The Wall Street Journal
Microsoft is expected to release its quarterly results on Tuesday, while other leading tech companies, International Business Machines Corp. and Intel Corp. to report quarterly earnings on Wednesday and Thursday, respectively. Other software companies have recently stated that customers are being more cautious about their spending due to the economic uncertainty.
Tesla’s results, due on Wednesday, are expected to either reassure investors or weigh on the stock price, which has fallen around 40% over the past three months. The electric-car maker delivered fewer vehicles in 2022 than originally forecast and recently slashed the prices of some models by nearly 20%.
According to FactSet, the fourth-quarter earnings season got off to a weak start. The data tracker said that with 11% of S&P 500 companies reporting, earnings are on track to fall 4.6% year-on-year, the first decline since the third quarter of 2020. Revenue will expected to increase by 3.7%.
Three credit card companies provide insight into consumer spending behavior. Visa and Mastercard Inc. are due to release their results on Thursday, while American Express is expected to report on Friday.
Boeing is expected to provide a sales update.
Photo: Jennifer Buchanan/Seattle Times/Associated Press
Elsewhere on Tuesday, 3M Co., Kimberly-Clark Corp. on Wednesday and Colgate-Palmolive Co. on Friday reveal how consumers are dealing with higher prices and whether a remedy could be on the horizon.
On Thursday, Procter & Gamble Co. reported lower earnings as it sold fewer items last quarter and increased prices by an average of 10%. CEO Jon Moeller warned that the outlook is not improving.
“The world seems to want things to get better, just like me,” Moeller said. “That’s not the reality. There is an unbelievable level of uncertainty.”
On Thursday, Southwest and American Airlines Group Inc. will report on air travel demand. Southwest’s report comes after the airline faced severe disruption in December after failing to recover quickly from winter storms. The airline has said the meltdown will wipe out profits in the fourth quarter.
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Boeing Co. is expected to provide an update on aircraft sales a day early. General Electric Co. is set to report earnings on Tuesday that may provide insight into demand for industrial sales.
Johnson & Johnson earnings released on Tuesday could provide some insight into consumer cost pressures. The healthcare products company, which recently slashed production of its unpopular Covid-19 shot, could show how much discretionary spending is pouring into skin and beauty products.
On the energy side, oil company Chevron Corp. expected to release their results on Friday after CEO Michael Wirth warned about oil prices at the World Economic Forum in Davos, Switzerland. “The current system is very constrained at the moment as there has been so much interference from governments that led to rigidity,” Mr Wirth said.
Other notable companies scheduled to report include Verizon on Tuesday and AT&T on Wednesday.
The railroad companies Union Pacific Corp.
on Tuesday and CSX Corp. on Wednesday are expected to report on the state of supply chains and offer updates.
Write to Sabela Ojea at [email protected]
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