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Four Magnificent 7 earnings reports will test the market. (0:17) Bond market will focus on GDP and April Jobs numbers. (3:03) Bessent says he does not know if Trump has spoken with Xi. (3:58)
The following is an abridged transcript:
Another week, another gear up in earnings season. 180 S&P 500 (SPY) companies are expected to issue results this week. And four more reports from Magnificent 7 companies will test the broader market’s appetite for momentum names.
After stocks and bonds stabilized last week – as President Donald Trump backed off his desire to oust Fed Chairman Jay Powell and indicated there’s a trade deal to be made with China – the next question is whether the AI trade can resume.
Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Meta (META) and Amazon (AMZN) are all due to weigh in on the week. Microsoft and Meta report on Wednesday. Apple and Amazon report Thursday.
While all companies have the potential to be market-moving, traders will be looking at Microsoft, backer of ChatGPT maker OpenAI, for an AI health check and Apple for insight on tariff impacts.
Analysts expect MSFT to report EPS of $3.22 on a revenue of $68.44 billion.
Morgan Stanley recently lowered some of its estimates for Microsoft due to high levels of macroeconomic uncertainty, but continues to favor Microsoft’s current valuation and sees the company as a key winner in the generative AI space.
In the bullish camp of SA analysts, Investor Overview says “Microsoft is now deliberately sacrificing profitability to achieve economies of scale. By the end of FY25, AI data center expansions will be able to meet demand, suggesting that the margin pressure is temporary.”
On the bear side, analyst Paul Franke says “tariff retaliation and outright boycott efforts overseas against American brands are now building steam. Plus, a justification problem arises in a U.S. recession, where businesses and consumers cut back spending on all software (keeping old versions working instead of upgrading as one example).”
For Apple. The Street expects EPS of $1.61 on revenue of $94.06 billion.
SA analyst The Value Portfolio says “with the company’s current weak share price of less than $200/share, that would put it at a P/E of
But Bluesea Research says “Apple will likely be one of the hardest hit by the tariff war due to its integrated supply chain and revenue from China,’ adding the f”orward PE multiple of the stock is higher than many other Mag 7 peers who have a lower PE multiple despite showing faster EPS growth.”
Also on the earnings calendar:
- Waste Management (WM) and Domino’s Pizza (DPZ) report Monday.
- Visa (V), Coca-Cola (KO), Honeywell (HON), Pfizer (PFE), Spotify (SPOT) and Starbucks (SBUX) issue numbers Tuesday.
- Joining Microsoft and Meta on Wednesday are Qualcomm (QCOM) and Caterpillar (CAT).
- Eli Lilly (LLY), Mastercard (MA), McDonald’s (MCD) join Apple and Amazon on Thursday.
- On Friday, ExxonMobil (XOM), Chevron (CVX), Cigna (CI) and Apollo Global Management (APO) report results.
On the economic front, there are big numbers coming on growth and the labor market.
The first estimate of Q1 GDP arrives Wednesday. Economists expect that growth rose at an annual rate of 0.4% for the first three months of the year.
Wells Fargo economists say: “Much has changed since the calendar flipped to 2025. Anticipation of tariff hikes led to a historic import surge that will punish GDP growth in Q1.”
“That said, some of these goods will end up in inventories, which will somewhat offset the bite from net exports,” they added. “Consumers were quiet in the first few months of the year but perked up in March with better weather and some tariff front-running purchases, especially of vehicles.”
Payrolls hit on Friday as usual. The consensus is for a rise in payrolls of 130,000, with the unemployment rate holding at 4.2% and average hourly earnings rising 0.3%.
A weak jobs report could give Trump what he’s looking for; a Fed that is more amenable to cutting interest rates.
In the news this weekend, Treasury Secretary Scott Bessent said that he doesn’t know if Trump has spoken directly with Chinese President Xi Jinping.
In an interview with ABC News “This Week,” he said; ‘I know they have a very good relationship and a lot of respect for each other, but again, I think that the Chinese will see that this high tariff level is unsustainable for their business model.”
Bessent said that it would take “months” to reach a deal with China, and he said “good behavior” from other countries taking part in negotiations may keep tariffs from staying high.
And Ken Griffin, founder of hedge fund Citadel, sharpened his criticism of the Trump administration’s trade policies, arguing that tariffs will not revive American manufacturing jobs as the president envisions. Instead, he urged that the United States lean into its competitive advantages.
“He dreams of giving people their dignity back, and I have to applaud him for having that dream,” Griffin said during remarks at Stanford University’s Graduate School of Business. However the ambition to resurrect manufacturing employment “is not going to come true,” he said.
“These jobs are not coming back to America. And to be clear, with an unemployment rate of 4%, America has moved on.”
And for income investors, Bank of Montreal (BMO) goes ex-dividend on Tuesday, paying out on May 27.
Kinder Morgan (KMI) and Morgan Stanley (MS) go ex-dividend on Wednesday. Both pay out on May 15.
And Ally Financial (ALLY) goes ex-dividend on Thursday with a May 15 payout date.
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