Stock Market Update: Key Earnings Reports and Federal Reserve Policy

Strategic Insights -

As the holiday-shortened trading week comes to a close, investors are eagerly awaiting a slew of key earnings reports from top companies, including Tesla, Apple, and Microsoft. Meanwhile, the Federal Reserve is set to announce its monetary policy decision, which will likely influence the stock market's trajectory in the coming weeks. The Dow industrials are entering their busiest week of the season, with almost half of the 30 Dow industrials stocks due to report.

The Federal Reserve's meeting will answer one key question: Have Wall Street's hawkish bets finally gotten ahead of or at least caught up with Fed policymakers' tightening plans? Markets expect four, possibly five, rate hikes in 2022. The Fed's bond buys are on track to end in March, but there could be a mild surprise on that front. Nomura economists predict that the Fed will move the end date up to mid-February, which would likely shift forward market expectations for when the Fed will begin to shrink its balance sheet, possibly to May.

Key Takeaways:

  • The Federal Reserve is set to announce its monetary policy decision, which will influence the stock market's trajectory.
  • Five resilient stocks in the market correction include American International Group, Tenet Healthcare, Williams Cos., Southern Copper, and Morgan Stanley.
  • Apple, Caterpillar, and Chevron are among the top stocks reporting earnings this week, with Apple expected to earn $1.89 a share and Caterpillar expected to earn $2.26 per share.
  • The chip sector is expected to report strong earnings, with Intel, Wolfspeed, and STMicroelectronics among the top performers.
  • Johnson & Johnson and Edwards Lifesciences are among the top medical stocks reporting earnings, with Johnson & Johnson expected to earn $2.12 per share and Edwards Lifesciences expected to report adjusted profit of 55 cents a share.
  • Western Digital and Micron are among the top semiconductor companies reporting earnings, with Western Digital expected to report $1.36 billion in sales and Micron expected to report $5.5 billion in sales.

Statistics:

  • The Dow industrials are down 6.6% for the year, with the S&P 500 down 4.3%.
  • The Federal Reserve is expected to raise interest rates four to five times in 2022.
  • Tesla is expected to earn $2.26 per share and report revenue of $16.99 billion in the December quarter.
  • Apple is expected to earn $1.89 a share and report revenue of $118.7 billion in the first fiscal quarter.
  • Intel is expected to report $1.36 billion in sales and 36 cents in earnings per share.
  • Johnson & Johnson is expected to earn $2.12 per share and report revenue of $25.29 billion.

Sources:

  • FactSet
  • Bloomberg
  • CNBC
  • Dow Jones
  • Nasdaq
  • The Federal Reserve