The Next Test for Markets: Tech Earnings
July 22 2018 - 9:29AM
Dow Jones News
By Lauren Pollock and Peter Santilli
With about 35% of the companies in the S&P 500 set to report
quarterly results this week, investors will get a fresh look at
whether companies ranging from automobile makers to technology
giants have remained on strong footing. Google parent Alphabet
Inc., Facebook Inc. and Amazon.com Inc. are among the most
high-profile names on tap.
Investors will be watching to see whether those companies can
maintain their surging pace of earnings and revenue growth. All
three are projected to post double-digit increases for both
metrics.
The companies, though, have drawn attention from regulators for
their growing dominance in their respective industries. Alphabet
and Facebook are facing scrutiny over their vast reach and access
to personal data, while President Donald Trump has lashed out at
Amazon's business practices and economic impact.
But those concerns haven't yet dented the companies' share
prices. All three stocks have hit a series of repeated all-time
highs in recent weeks, closing at new highs most recently on
Tuesday. The S&P 500, meanwhile, is 2.5% below its all-time
high, and a blowout quarter from the tech giants -- which have been
some of the best performers in the S&P 500 this year -- could
help propel the index to its first record since January.
In all this earnings season, 87% of companies have posted
stronger-than-expected profits and 77% have beat revenue
expectations. Earnings are up 21% from the year-earlier period,
which would mark the second-highest growth rate since the third
quarter of 2010, according to FactSet.
Facebook is projected to report another slight uptick in monthly
active users when it reports results Wednesday. After facing a
number of crises since the 2016 election, including widespread
data-privacy concerns, the social-media company has sought to
repair its image among users and advertisers as well as stave off
further regulation.
Google's advertising revenue, which accounts for nearly all of
Alphabet's top line, is expected to climb again when the company
reports results Monday. Google has maintained its lead in the
global market for online ads despite its massive size and growing
competition from fast-expanding challengers.
Amazon's profit is seen topping $1 billion for the third
straight quarter when it posts results Thursday. The online retail
giant, which has a reputation for plowing nearly every dollar it
earns into investments, has credited its strong results to its
cloud-services and advertising businesses.
(END) Dow Jones Newswires
July 22, 2018 09:14 ET (13:14 GMT)
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