Next week will be an eventful one, with big tech earnings, the U.S. labor market, and FOMC’s policy meeting taking center stage. We can expect earnings from some of the largest companies in the world, including big tech firms Apple, Google, Amazon, and Meta Platforms. ExxonMobil, Pfizer, UPS, McDonald’s, Caterpillar, Starbucks, and automakers Ford and General Motors will also report next week, among many others.
The latest reports on the labor market will arrive next week, including the December JOLTS report, ADP’s National Employment Report tracking private sector payrolls, and the January nonfarm payrolls report. The Federal Open Market Committee (FOMC) will gather for its first policy meeting of 2023, where it is widely expected to raise interest rates by 25 basis points. We will also receive the latest updates on home prices, with the Case-Shiller National Home Price Index for November, as well as PMI readings from the Institute for Supply Management (ISM).
Earnings From Big Tech
Investors will receive earnings reports from some of the largest companies in the world next week, including big tech companies Apple, Amazon, Meta Platforms, and Google parent Alphabet. Meta will release its earnings on Wednesday, while Apple, Amazon, and Alphabet will report on Thursday. Other companies scheduled to report next week include ExxonMobil, Pfizer, McDonald’s, UPS, Caterpillar, AMD, Eli Lilly, Merck, Starbucks, and automakers Ford and General Motors, among many others.
Analysts are projecting one of the toughest earnings seasons on record for big tech, as the industry grapples with stagnating sales and higher interest rates. Rising interest rates tend to negatively affect the tech industry and other growth sectors, which take on high levels of debt to finance their growth. The cost of servicing this debt increases as interest rates rise.
Meta earnings per share (EPS) are projected to plunge 38% to $2.25, driven lower by an advertising slowdown and losses associated with the metaverse. Despite projected revenue growth of 6%, analysts are forecasting Amazon EPS to plummet 83% to $0.21, as falling ecommerce sales weigh on profitability. Forecasts are more optimistic for Google parent Alphabet, with EPS projected to fall by a comparatively smaller 13.4%.1
The Jobs Market in the Spotlight
The U.S. labor market will be in the spotlight next week. On Wednesday, the Labor Department will release the Job Openings and Labor Turnover Survey (JOLTS) report for December, tracking job openings, hires, quits, and separations last month. Payroll provider ADP will also release its National Employment Report, tracking growth in private sector payrolls in January.
This will set the stage for the Labor Department’s nonfarm payrolls report on Friday. Economists project the U.S. economy added 185,000 jobs this month, decelerating from a gain of 223,000 in December and marking the slowest growth since a loss of 306,000 jobs in December of 2020. The unemployment rate is projected to tick slightly higher to 3.6%, up from the current multi-decade low of 3.5% that matches the pre-pandemic rate.
Global Central Banks Hold Policy Meetings
On Tuesday, Federal Reserve policymakers will gather for the two-day meeting of the Federal Open Market Committee (FOMC), concluding with an interest rate decision on Wednesday. Traders widely expect Fed officials to raise interest rates by 25 basis points (bps), according to fed funds futures data collected by CME Group,2 which would set the benchmark federal funds rate in a range of 4.5-4.75%.
The European Central Bank (ECB) and the Bank of England (BoE) will hold policy meetings on Thursday. ECB policymakers are expected to raise interest rates by 50 bps in their ongoing effort to tame record-high inflation in the eurozone, which hit a recent peak of 10.6% in October. BoE officials are also expected to hike rates by 50 bps, as the U.K. grapples with an economic slowdown and the highest inflation rate in over 40 years.