The economic calendar has little scheduled for next week, and Federal Reserve officials are in a quiet period ahead of their next meeting in early May. But then there are the company’s earnings reports, which will eclipse everything else, in terms of the market. More than a third (35%) of the S&P 500 reports earnings next week — including large-cap companies like Microsoft, Alphabet, Meta Platforms and Amazon — compared with less than 12% in the week just ended and just 2% last week. Media Services shares are up 20% in 2023 (thanks Meta, +77% YTD). Information technology names lead 19% (Alphabet and Microsoft, both +19%). Consumer discretionary shares rose 14% (Amazon + 27%). “We think tech companies will live up to expectations,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina. He’s not the only optimist. “With enough balance between companies that do well, tend to do well in terms of economic activity, manage their costs this quarter, it’s likely we’ll have more good news than bad news. But bad news is likely to unfold with Art Hogan, chief market strategist at B. Riley Wealth Management, saying: “It’s more punishing than usual because these stocks have performed so well. What worries Zaccarelli is the outlook for the rest of the year. I think there’s a lot of room for disappointment, whether that falls short of expectations or is more likely due to future guidance.” Technology managers are likely to “indicate that the future is doomed. turbulence, uncertainty and they are taking steps to prepare for possible economic weakness…a lot of good news has been priced in, that it is going to be really tough, Zaccarelli said. EPS cut first This only adds to the possibility of a drop in prices as in May, the risks in the market are increasing. “The history of negative EPS revision cycles comparable to the one we’re seeing in this cycle suggests there’s more downside to both stock prices and [earnings] estimates,” wrote Venu Krishna, head of US equity strategy at Barclays Capital this week. Barclays studied four other periods since the mid-1980s when estimating earnings for S&P 500 over the next 12 months fell more than 5%, and when the Conference Board’s Index of Leading Economic Indices is as weak as it is today, every other time, earnings estimates fell by about 25%, making this time Krishna “is increasingly confident that an EPS cut is far from real.” So far this quarter, Refinitiv data shows S&P 500 earnings 4.7% lower year-over-year. previous. , Federal Reserve staff, leading economic indicators, bank lending activity slowing, Federal Reserve survey of jobless claims and unemployment rate “The price swings are bullish,” said Jeffrey Hirsch, editor-in-chief of Stock Trader’s Almanac in Philadelphia last week. mine is weakening in the short term. “I don’t expect the market to bounce off the October lows or the economy to enter a recession,” he said, but the six-month outlook is usually the worst of the year (May-October). ) “very obscure”. After all, the S&P 500 is up 7.7% so far in 2023, and notably more than 90% of that profit has come since the Silicon Valley and Signature banks went bust in mid-March, less than six weeks ago. Hirsch said investors aren’t just worried about the Federal Reserve’s monetary policy, the pace of inflation, and the recession. There’s also the fight over the Federal debt ceiling. Earlier this week, economists at Goldman Sachs led by Jan Hatzius wrote that “weak tax collection through April suggests a high probability that the debt limit deadline will be reached in the first half of June,” instead because of the beginning of August, which the bank investors had expected earlier. The debt ceiling debate, Hirsch said, is strangely similar to the last one in 2011, from a seasonal point of view, the year before the presidential election with Democrats controlling the White House and Senate. House and Republicans control the House. At the time, the S&P 500 had dropped 19.4% from its April high to its October 3 low. Meanwhile, next week is the last full trading week before the old adage of Wall Street “sell in May and go away” applies. At some point in the future, that “will probably be a prudent move,” says Hirsch. Next week Monday 10:30 a.m. ET: Dallas Fed Manufacturing Survey (April) Earnings: Coca-Cola, Whirlpool, First Republic, Packaging Corp. of America Tuesday 8:30 a.m. ET: Philadelphia Fed Services Sector Survey (April) 9:00 a.m. ET: FHFA Home Price Index (February); S&P Case-Shiller Home Price Index (February) 10:00 a.m. ET: Conference Board Consumer Confidence Survey (April); New home sales (March); Richmond Fed Index (April) Earnings: Alphabet, Microsoft, Visa, Paccar, PepsiCo, Biogen, General Electric, Northern Trust, General Motors, 3M, McDonalds, Boston Properties Wednesday 8:30 a.m. ET: Orders durable (March); Wholesale Inventories (March) Earnings: Meta Platforms, Norfolk Southern, Hilton Hotels, Boeing, Ebay, KLA-Tencor, Pioneer Natural Thursday 8:30 a.m. ET: Jobless Claims (week ended on Feb. April 22); GDP Q1 (first preliminary) 10:00 a.m. ET: Pending Home Sales (March) 11:00 a.m. ET: Kansas City Fed Manufacturing Index (April) Earnings: Amazon, Intel, Amgen, Eli Lilly, Merck, Bristol-Byers Squibb, AbbVie, Hershey, Caterpillar, Honeywell, Mastercard Friday 8:30 a.m. ET Personal Income (March); Consumer spending (March); Core PCE (March) 9:45 a.m. ET: Chicago (PMI) April earnings: Chevron, ExxonMobil, Colgate-Palmolive —Samantha Subin of CNBC, Alexander Harring, Robert Hum, and Michael Bloom contributed to this report.