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There's a lot riding on results from Alphabet (GOOG, GOOGL) and Microsoft (MSFT) out later today.
But the market's reaction to last week's earnings report from Netflix (NFLX) may have eased the pressure on what members of the "Magnificent Seven" have in store for investors this week.
Data from FactSet highlighted by Yahoo Finance's Josh Schafer in Sunday's Morning Brief showed how much heavy lifting the Magnificent Seven companies, minus Tesla (TSLA), are expected to do for the S&P 500 this earnings season.
This group of six companies — Alphabet, Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft, and Nvidia (NVDA) — are expected to report earnings growth north of 50% during the fourth quarter. The rest of the index should see earnings, collectively, fall 10.4% from the same quarter last year.
Were the company to have missed these growth targets and cautioned on the benefits these initiatives are providing in pursuit of this target, investors may have judged the stock more harshly.
Aggregate tailwinds can only take a stock so far. Ultimately, management needs to deliver on its promises.
But the reception Netflix earned from the Street shows the willingness investors have in this environment to reward execution.
With 25% of the S&P 500 having reported earnings through last Friday, John Butters's team at FactSet found earnings beats are being rewarded more than average while misses are being penalized less than average.
And how this trend holds up as the remaining 75% of the index reports over the coming weeks might have more to say about the market's overall direction than results from the companies most responsible for actual earnings growth.
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