Has the stock market bottomed?

Just five tech companies control nearly 25% of the S&P 500 index’s market cap.
AAPL, MSFT, AMZN, GOOG, and META all report earnings this week.
Their results will likely determine the direction of the market for months to come.

This is a pivotal time that could either turn everything around for the stock market, or send it diving to new lows for the year. 🤔

If you’re invested in individual stocks here’s a schedule of notable company earnings.

Let’s go through each event day by day.

Monday

Economic data: Dallas Fed Manufacturing Index

We’ll know what manufacturers are concerned about, and their outlook for the next 6 months.

Anticipated Stock earnings: Squarespace, Bank of Hawaii, Logitech, 

The earnings reports of these companies will set the tone for the rest of the week.

Tuesday

Economic data: House price index, consumer confidence, new home sales.

All important indicators to suggest how the US economy is doing.

Anticipated Stock earnings: Alphabet (Google), Microsoft, Coca-Cola, McDonalds, Kimberly-Clark, Visa, Chipotle

I have a lot of Alphabet shares so I hope the stock doesn’t crash, lol. Right now I think the best value for your money is Alphabet shares. It’s a fast growing business at a reasonable price. I recently recorded a fundamental analysis of Alphabet on video to explain why I like this stock. You can check it out here if you haven’t seen it yet.

Wednesday

Economic data: Fed interest rate decision

Most likely the Federal Reserve will raise the overnight rate by 0.75%. However, there’s a chance it could go a full 1.00%. If that happens, prepare for a major stock market sell off.

Anticipated Stock earnings: Shopify, Boeing, Meta, Qualcomm, Etsy, Teladoc, Ford

E-commerce businesses as well as Meta (Facebook) have seen shares plummet this year. But now could be the turning point for them. Their earnings as well as guidance will be watched very closely by analysts and investors.

Thursday

Economic data: U.S. GDP, Initial jobless claims

We’ll finally know if the U.S. is currently in a technical recession or not. If GDP growth comes in negative then that’s 2 consecutive negative quarters. A recession would have huge ramifications for policy makers. Will they continue to increase interest rates to slow economic activity when the economy is already shrinking?

Anticipated Stock earnings: Amazon, Apple, Pfizer, Mastercard, Intel, Yamana Gold, Comcast

There are some high expectations for these companies this quarter, especially Apple. Let’s see if they can deliver.

Friday

Economic data: PCE price index, Chicago PMI, Consumer sentiment, Inflation expectations

PCE is an inflation measure tracking personal consumption expenditures. Chicago PMI shows how confident manufacturers are feeling. This figure has been declining since a year ago. If it falls below 55 expect the economy to slow down.

Also, Statistics Canada will release the economic growth data for May. Forecasters predict a 0.2% contraction from April’s numbers, largely driven by falling home sales.

Anticipated Stock earnings: Chevron, P&G, Sony, ExxonMobil

Energy companies should have done well last quarter. But most of them were reluctant to aggressively expand their operations.

Putting it all together

If earnings come in beating expectations, and economic data is strong, I would expect the stock market to rally this fall. I will probably add six figures into the stock market from my HELOC to take advantage of the market’s recovery. 🙂 I would pay about 5% interest on the borrowed money from the line of credit, but I expect a 15%+ return in the stock market over the next 12 months. I certainly like those odds. 😉

However if earnings mostly miss, stocks fall this week, and the economy is still contracting, then I will hold off on investing any new money. If this happens we’ll most likely see markets drop to new lows due to declining corporate profits.

By the end of this week we should have a better idea of whether the bear market will continue, or if the bottom was reached in June.

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Random Useless Fact:

Tipping is not customary in most countries.