Next week is shaping up to be the most important one of 2024 thus far for Wall Street. Investors are headed into the thick of earnings season, with results on deck from the bulk of the so-called Magnificent Seven names. These companies have high bars to clear as they try to justify their valuations after their recent rally. Alphabet , Apple , Amazon , Meta Platforms and Microsoft are all set to report. On top of that, the Federal Reserve’s latest monetary policy decision and the January jobs report will be in focus. Mega-cap tech results will be especially important for investors who have been seeking signs of a broadening rally in 2024, only to be disappointed thus far. While tech behemoths such as Nvidia have climbed 23% this year, the small-cap Russell 2000 is lower by more than 2%. “Those earnings are particularly important because we’ve continued to see, despite the fact that we were expecting a rotation, we’re still seeing strong performance out of the technology and communication services stocks to start the year,” said Shannon Saccocia, chief investment officer at NB Private Wealth. As it is, some worry that a failure of the broader market to catch up to the mega-cap high fliers could suggest the recent rally won’t be sustainable for much longer. “At some point we continue to believe that something’s gotta give,” BTIG’s Jonathan Krinsky wrote Thursday. “The longer this divergence goes the more violent its resolution is likely to be. When there are fewer names supporting the indices, a downside unwind can be quite vicious.” Stocks wobbled Friday, but the three major averages — S & P 500, Dow Jones Industrial Average and Nasdaq Composite — registered their 12th winning week in 13. The S & P 500 and Nasdaq gained about 1% for the week, each, while the Dow rose 0.7%. No room to disappoint The mega-cap tech companies reporting next week have a lot to live up to as investors worry they may have run up too high and too fast on artificial intelligence…
2024-01-26 14:46:00
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