Market Shakes Off GDP Dip; Microsoft, Meta Could Be a Different Story
As four of the Magnificent Seven names report this week, comments about economic certainty could shake the market.
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The market did a nice job of shaking off concerns about some poor economic data on Wednesday. GDP was weaker than expected, but the data was likely corrupted by a flood of imports to beat the imposition of new tariffs. There was other financial maneuvering as well, and the Trump administration blamed some of the weakness on the unwinding of Biden administration policies.
It didn’t hurt matters that there was a huge spike in the closing minutes of the month. There was money to put to work and the institutions deployed it aggressively. The Magnificent Seven MAGS was down 3% early in the day but ended up with a positive close.
While there were plenty of excuses for the poor data, there are growing concerns about the economy. Tariff policy may not have been the catalyst for problems in the data for the first quarter of 2025, but it is very likely to have a very significant impact on second-quarter numbers.
For now, investors are willing to overlook GDP and some sticky inflation, but the conference calls from four of the Magnificent Seven in the next two days will provide plenty of fodder for the folks trying to figure out how healthy the economy really is.
We kick off with Microsoft MSFT and Meta META on Wednesday night, followed by Apple AAPL and Amazon AMZN on Thursday night. It is very likely that there will be many comments about how economic uncertainty is making it extremely difficult to provide forward guidance.
Microsoft is up sharply after the bell with solid beats on both the top and bottom lines. The numbers look good, but the guidance on the conference call will determine the ultimate outcome.
Meta also has top- and bottom-line beats and is up about 1%, but its guidance for the second quarter looks a bit soft and it is fading after the initial frenzy.
We will have to wait for more details from the conference call before we can come to any conclusion about these two mega names, but the overall technical action for the broad market continues to be very positive. While there are plenty of reasons to worry, the price action suggests that there may be too much pessimism.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
