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Big tech earnings on tap, Federal Reserve decision this week

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Yahoo Finance’s Emily McCormick breaks down what to watch this week.

Video Transcript

ZACK GUZMAN: Cancel any other plans you've got this week. Because we are jam packed with everything here on Yahoo Finance. Not just earnings from those big tech names I mentioned, but a fed meeting and that Robinhood IPO all on slates, as we are watching the total proceeds from IPOs surpass last year's record potentially by the end of this week, with still five months left to go on the year. And for more on what we'll be watching this week, Yahoo Finance's Emily McCormick kicks things off for us today. Emily?

EMILY MCCORMICK: Well Zack, as you mentioned, a ton for investors to be sinking their teeth into this week. And this week is really all about those mega cap tech companies when it comes to earnings, as well as some other major S&P 500 names in other industries that will also be reporting those second quarter results. But to just give you a sense of the earnings calendar for the coming days, today, we have Tesla reporting results after market close-- that company's results coming on the heels of record second quarter deliveries and strong production figures.

And then tomorrow, we also have Apple and Google's parent company, Alphabet, reporting results. Wednesday, we have Facebook and PayPal. And Thursday, we can look forward to Amazon and Pinterest. Now to set the stage for this week of earnings, we should note that this has already been an exceptionally strong second quarter earnings season. As of Friday 24%, of companies in the S&P 500 have reported second quarter results. And of these, 88% had topped consensus earnings per share estimates according to FactSet data.

Now currently, the expected earnings growth rate for all S&P 500 companies in aggregate is over 74%. And that would be the highest since the fourth quarter of 2009 if that does materialize. Now for these tech companies in particular, things are looking pretty good. If we look out to these coming days worth of reports, we did get results out from Snapchat's parent company, Snap last week, that showed that the company added the most users and grew revenue by the most in four years. And Twitter also grew active users and sales more than expected.

So both of those results did bode well for other ad-driven tech platforms like Facebook and Google, as well as for companies with advertising businesses like Amazon. Now all that said, the sustainability of growth is going to be a key question here for these tech companies, especially since they had been such major outperformers in 2020, but lost some of that steam in the first months of this year.

But that said, against this backdrop, we do have some strong internet ad trends that we've been seeing. And tech names like Apple have also catalysts coming up, like the iPhone 13 upgrade cycle expected for later this year. So all of us said, a lot of earnings to keep an eye on and especially watch out for those big cap tech stocks, guys.

KRISTIN MYERS: All right Emily, it's not just earnings that we're going to be paying attention to this week. Tell us a little bit about some of the economic data. I know we've got jobless claims, but also some of those second quarter GDP numbers coming out this week as well.

EMILY MCCORMICK: That's right, Kristin. In addition to those all important weekly unemployment claims, the two big events to be keeping an eye on this week will be that advanced print on second quarter GDP on Thursday, as well as the Federal Reserve's monetary policy decision and press conference on Wednesday. And for the Fed, this meeting is not expected to make a lot of waves. We've seen inflation data continuing to rise more than expected over the past couple of months. But there have now, been some concerns about the Delta Variant of the Coronavirus that will likely be keeping the Fed on hold, at least a bit longer, as it relates to announcing asset purchase tapering.

And then on Thursday, for that second quarter GDP report, this is expected to show that peak growth rate during the recovery. Consensus is looking for GDP to rise by 8 and 1/2% on an annualized basis for that April through June quarter, and accelerate from the first quarter 6.4% growth rate. And all this is supposed to come on the heels of the strong retail sales reports that we had at the beginning of the year, that stimulus-fueled spending on the part of the consumer, and the fact that widespread vaccinations had been helping the services sector. So again, that report on Thursday will be a bit backwards looking for the second quarter, but will give a more holistic approach and view on the recovery so far. Guys?

ZACK GUZMAN: Yeah, such a busy week-- I know you'll be watching a lot of that for us here. We got coverage on all those things here on Yahoo Finance Live. Emily McCormick, thanks again for the look ahead.