A busy week ahead will be crucial for the rebound of US stocks, as investors turn their attention to a series of corporate earnings reports, including major results from Apple and Microsoft. Alongside these earnings, the prospect of global trade developments could introduce volatility into the market, adding another layer of uncertainty.
The US stock market has been recovering, with the S&P 500 on track for solid weekly gains, but it remains down about 10% from its February record high, according to news agency Reuters.
Investors are weighing whether the recent uptick signals that the worst of the tariff-induced market drop has passed.
Investor sentiment has been bolstered this week by signs of a potential de-escalation in the Trump administration’s trade stance, particularly regarding tensions with China. However, the situation remains fluid, and any fresh developments on tariffs could have an immediate impact on the market.
“There seems to be some potential for compromise on the tariff situation,” said Michael Mullaney, director of global markets research at Boston Partners. “But stocks will remain sensitive to the news flow that day. If it’s positive on tariffs, the market goes up. If it’s negative on tariffs, the market goes down.”
A critical aspect of next week will be the corporate earnings season. About 180 companies from the S&P 500, representing more than 40% of the index’s market value, are scheduled to report their quarterly results. Among the most anticipated reports are those from major tech companies, including Apple, Microsoft, Amazon, and Meta Platforms, all of which have seen a slowdown in their stock performance this year after strong gains in previous years.
Despite concerns about a potential earnings slowdown, the early results indicate better-than-expected performance. S&P 500 earnings for the first quarter are projected to rise 9.7% from a year earlier, surpassing initial expectations.
However, some companies, including Procter & Gamble, PepsiCo, and Thermo Fisher, have lowered their annual profit forecasts, signaling potential challenges ahead. Investors are also closely monitoring the impact of global trade tensions on economic data, with fears that new tariffs could lead to higher prices and slower economic growth.
In addition to corporate earnings, next week will also see the release of several key economic indicators, including the first-quarter US GDP report and the March personal consumption expenditures (PCE) price index, a crucial inflation measure. The May 2 US jobs report is expected to be the most significant data point, with economists forecasting an increase of 135,000 jobs in April. “If the consumer is going to be the engine of ongoing growth in the US, it puts the burden of proof onto the jobs report,” said Bob Savage, head of markets macro strategy at BNY.
The results of these reports and the direction of trade talks will likely determine whether the recent stock market rally continues or faces new challenges.
