S&P 500′s Direction Will be Dictated by These Four Earnings Reports

horse-raceNext week will be the biggest earnings week of the quarter, with the four biggest market-moving companies in the S&P 500 all reporting. Here’s what investors can expect.

Alphabet Inc (NASDAQ:GOOGL)

  • Earnings date: July 28, 2016
  • Last quarter: Google’s Q1 report was uncharacteristically awful. The stock plunged more than $100 over the next couple of months, but has regained much of those losses since late June.
  • This quarter: Investors are expecting big things from the company formerly named Google this time around. A bad report would crush the stock again, but a killer one would likely propel it to all-time highs and beyond.

Amazon.com, Inc. (NASDAQ:AMZN)

  • Earnings date: July 28, 2016
  • Last quarter: Amazon blew away expectations in Q1, sending the stock on a huge +24% tear over the next three months.
  • This quarter: Don’t expect Amazon’s famous sales growth to slow, but any potential price upside might already be priced in.

Apple Inc (NASDAQ:AAPL)

  • Earnings date: July 26, 2016
  • Last quarter: Apple’s Q1 report was a disaster. Everything missed estimates and the stock fell from $112 to $90 over the following month.
  • This quarter: Analysts’ Q2 estimates have been falling steadily, which will make an earnings beat much easier. Apple needs to crush it this time around, or the stock could re-test its yearly lows again.

Facebook Inc (NASDAQ:FB)

  • Earnings date: July 27, 2016
  • Last quarter: Facebook posted strong Q1 numbers, which popped the stock to new all-time highs. FB has basically gone sideways since then, however.
  • This quarter: If FB wants to become the first trillion dollar company, it’ll need a big number here. Expectations are so incredibly high though (analysts are looking for +105% EPS growth and +47% revenue growth), that a disappointment wouldn’t be a surprise.

SPY’s Direction Hinging on These Reports

The SPDR S&P 500 ETF Trust (NYSE:SPY) has risen 6.5% so far this year, largely on the backs of Amazon (+10% YTD), and Facebook (+15% YTD), and in spite of Apple (-6% YTD) and Alphabet (-2.4% YTD).

SPY-2016-07-23

You can pretty much throw all the other earnings reports this quarter out the window. These four stocks will determine the direction the S&P takes over the next few months. If 3 or more post strong results, we’ll see fresh all-time highs. If 3 or 4 post duds, expect volatility to spike and the markets to head lower. It’s just that simple.

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