Here are the most important things for investors to know before they start trading today:
1. Interest Rates and Technology
This week is crucial for the stock market because the Federal Reserve, a big player in managing the U.S. economy, will announce its decision on interest rates on Wednesday. Investors predict that the central bank will likely keep rates unchanged.
This expectation comes after recent data revealed that the economy grew more than anticipated at the end of last year, and inflation slowed down.
Additionally, many tech companies, which have played a significant role in driving stock prices to record levels, will be sharing their financial results throughout this busy week of earnings announcements.
2. Technology Focus
This week is the most active period of the earnings season, with around one-fifth of the S&P 500 and Dow Jones Industrial Average companies set to release their financial reports.
Among them are several major tech companies, which are among the largest in the U.S. based on market capitalization. These tech giants have played a significant role in the stock market’s success over the past year. Investors will gain insights into the performance of Microsoft, Alphabet, Amazon, Meta, and Apple, especially at a time when tech companies have been implementing layoffs.
However, it’s not just tech companies in the spotlight. Other major players like Boeing, General Motors, and Starbucks will also be reporting their earnings this week. In the pharmaceutical sector, Novo Nordisk is set to announce results amid a surge in the market value due to the success of weight loss drugs. Here are the key earnings reports to keep an eye on this week:
- Tuesday: General Motors, Pfizer, JetBlue, UPS (before the opening bell); Microsoft, Alphabet, Starbucks, Advanced Micro Devices (after the closing bell)
- Wednesday: Boeing, Novo Nordisk, GlaxoSmithKline (before the opening bell); Qualcomm (after the closing bell)
- Thursday: Merck, Peloton (before the opening bell); Amazon, Meta, Apple (after the closing bell)
- Friday: Bristol-Myers Squibb (before the opening bell)
3. Turbulent Times for Boeing
Boeing is releasing its earnings amid growing concerns from investors regarding its 737 Max program. The company’s stocks have fallen by over 20% this year, triggered by an incident where a panel blew out of a 737 Max 9 plane during an Alaska Airlines flight. Recently, Reuters revealed that United Airlines has approached Airbus to buy A321neo jets while waiting for the long-delayed 737 Max 10 jets.
United CEO Scott Kirby expressed uncertainty about the likelihood of that order during a CNBC interview last week. Additionally, Boeing’s CEO Dave Calhoun met with lawmakers on Capitol Hill to discuss the latest issues with Max just days before the earnings report.
4. Challenges in Pharma Revenue
Several major pharmaceutical companies, including two reporting earnings this week, are facing a tough road ahead to stay competitive. This challenge arises from the impending expiration of patents for many high-selling drugs, known as the “patent cliff.” When patents expire, companies lose exclusive rights to a treatment, allowing competitors to introduce alternatives, often at lower prices.
While this can benefit consumers with reduced costs, it poses a significant threat to drugmakers, resulting in billions of dollars less in revenue.
Companies like Johnson & Johnson, Merck, and Bristol Myers Squibb in the biotech and pharmaceutical sectors are strategizing to either expand other parts of their businesses or employ creative measures to delay patent expirations. These efforts aim to mitigate the impact of revenue losses caused by the expiration of exclusive rights to their drugs.
5. The Kansas City Chiefs Reign
Get ready for a Super Bowl rematch! On February 11 in Las Vegas, the Kansas City Chiefs will face off against the San Francisco 49ers in Super Bowl LVIII. This marks the Chiefs’ fourth appearance in the Super Bowl within the past five years, including their victory over the 49ers in 2020.
The Chiefs earned their spot by defeating the top-seeded Baltimore Ravens and the likely league MVP Lamar Jackson, while the 49ers secured their place with a second-half comeback win against the Detroit Lions.
The game, set in the gambling capital of the U.S., coincides with the NFL’s full embrace of legal sports betting. Additionally, the event might receive an extra boost in attention due to the league’s increased engagement, partly attributed to the relationship between music superstar Taylor Swift and Chiefs tight end Travis Kelce.
This week’s financial highlights include the Federal Reserve’s decision on interest rates, tech companies’ earnings impact, Boeing’s difficulties, pharmaceutical companies facing patent challenges, and the upcoming Super Bowl rematch between the Kansas City Chiefs and San Francisco 49ers. Additionally, the NFL’s embrace of legal sports betting and Taylor Swift’s influence on league engagement are noteworthy.