VIDEO: Nvidia Will Get Major Updates from These 4 Holdings
As corporations report their earnings at a breakneck pace, here are the ones we're watching closely.
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In today’s Daily Rundown video, Chris Versace lays out the items the Pro Portfolio will be focusing on during the busy week ahead.
We have a breakneck pace of corporate earnings, including for multiple portfolio holdings, but Chris explains why we and the market will be focused on results and comments from Apple AAPL, Microsoft MSFT, Meta META and Amazon AMZN, and what they mean for Nvidia NVDA.
In sharing the economic data that will be coming at us over the next few days, Chris explains why the latest from port container operators and air freight handlers points to supply chain issues and sticky inflation ahead. It also suggests that when retailers report their April quarter earnings, their guidance could be problematic.
Transcript
CHRIS VERSACE: Hey, everybody, Chris Versace here. And happy Monday to you, as we get ready to sunset the month of April and begin the second month of the current quarter, better known to you and me as the month of May. We did see a nice rebound in the market late last week. But even so, as much as we enjoyed that, we still have to recognize that, on a year-to-date basis, the S&P 500 is down just over 6%. And the NASDAQ Composite is down about 10%, also on a year-to-date basis.
Now, as we close one month, April, and start the next one, we are going to have a very busy week. And as things tend to do, especially when we're in the thick of the latest earnings season, things are going to accelerate as we move through the week. And, yes, as you'll see, Thursday and Friday will be extremely busy for the market, but also for us as well. What is driving this big week? Well, it's a few fronts, actually.
On the first, the number of S&P 500 companies reporting is going to be big. It's going to be the busiest week we've seen thus far, about 180 and full. And as I explained in Friday's roundup, by the end of this week, just over 70% of the S&P 500 will have reported. That's about double the number of companies that reported through the end of last Friday.
What does this tell us? It's going to be fast. It's going to be furious. We're going to get a lot of data. And if you're thinking that we are going to do our best to connect as many dots as possible, well, you are correct. And as we do that, we'll be focusing on comments not only about particular industries and sectors. But we'll also be rolling up expectations for June quarter guidance for the S&P 500 basket of companies, as well as the second half of the year.
It's also going to be a big week on the earnings front because four companies in particular are reporting. And these four account for just over 19% of the S&P 500. Who are they? Well, the likely suspects, right? Apple, Amazon, Microsoft, and Meta. Yes, we and the market will be digging into their quarterly results. We'll be digging into their quarterly guidance as well, the puts and the takes.
But we also know that the market is going to be laser focused on what Amazon, Meta, and Microsoft have to say about their capital spending, dollars for AI, and for data center. We saw that last week when Alphabet reported, reaffirming its very big, $75 billion big capital spending plan, that really skews heavily, heavily, towards AI, data center, and servers. So we will be watching what those three companies have to say this week. Again, it's going to be Amazon, Meta, and Microsoft.
And the aggregate capital spending comments, we know who everybody is going to be looking at. It's going to be NVIDIA. And remember, NVIDIA accounts for about 5.5% of the S&P 500. So when you kind of roll back and you think about these five companies, it's almost 25% of the basket. So, again, it's going to be a very big week for the S&P 500. And we know that these five companies account for even more of the NASDAQ Composite. So it's also going to be a very, very big week for that market index as well.
Now, outside of those four companies that are reporting, we at the portfolio have a number of others that we'll be paying close attention to, updating our thinking, potentially revisiting our price targets as well. I'm talking about Waste Management, Labcorp, Qualcomm, Universal Display, and, of course, Vulcan Materials. So we're going to have a lot coming your way over the next several days, just as it relates to those earnings, but also other earnings reports as well.
So please be sure to keep an eye on your email for our alerts. Now, a minute ago, I said to you that this week, at least by the end of the week, I mean, roughly 70, 72, 73% of the S&P 500 will have reported. The remaining 30%, it includes a wide swath of companies, including other tech companies we'll want to pay attention to. But one of the larger cohorts is going to be retailers.
Most of those companies, retailers, they tend to close out their quarter at the end of April, so in the next couple of days. That means they will be reporting in the next several weeks. And given the nature of their business, we are going to want to pay close attention to what they have to say about tariffs. Now, setting the stage for that, we are getting comments from container port operators and air freight managers that they are seeing sharp declines in goods being transported from, you guessed it, China.
In particular, the Port of Los Angeles, which is one of the main routes of entry for goods from China, they are starting to see a dramatic slowdown in what they expect to start arriving as of May 4th. Some indications say that those volumes will be a third lower than they were a year ago. At the same time, air freight handlers, they are also seeing a sharp decline in bookings. This tells us that we are likely to see supply chain issues once again.
And as we know, when we get supply chain issues, we have to pay very close attention to the oncoming inflation data. Why is this important? Well, we have to remember that, even though the Fed is going to be meeting next week, the timing of this data, the timing of the impact of what we'll see on this port information, air freight information, we have to think about the Fed's policy meeting on June 18th.
Why? Well, when we think about the timing of the May CPI report, which will start to show some of this data, it falls before that policy meeting. Those comments from those port operators, they also give us another reason to be very, let's just say, skeptical, about the guidance that we're going to get, relative to expectations from retailers. We're going to be very careful and cautious here with this.
Now, as it relates to the Fed, because I was just referring to them, we have no Fed speakers this week because the central bank is once again in the midst of its quiet period ahead of its policy meeting that will conclude next week. This means that the market is going to be left to its own devices to interpret the wide array of economic data we're going to get this week, march personal income and spending, March PCE price index data, which we know tends to be the Fed's preferred inflation metric.
But given the timing of tariffs, I would argue that this data is going to be a little rear view-ish, and will be more focused on inflation data for the month of April and subsequent months, as I just alluded to. We will also get the April ISM Manufacturing PMI. We'll be watching this closely, to see if there was a pull forward in March, given the expectation for April tariffs. We have the April employment report. You know we have to watch this, not just for wage data, but also for two reasons.
One, we're going to want to watch private sector hiring, just to see if there is a bit of a slowdown. We're also going to want to watch public job figures because, what did we see in the Challenger job cuts report for February and March? Big increases, primarily tied to DOGE. So we'll want to see if we're starting to see the flow through of those expected job cuts in the April employment data.
We'll also get the April Challenger job cuts report, something we'll be watching as we try to zero in on what the employment report could say in the coming months. And this is all important to us because, while folks tend to focus on the Fed and inflation, we have to remember the other part of their dual mandate, which is maximum employment. And, of course, as we get all this data, we'll be rolling it up for GDP expectations as we start to formulate what they look like for the second quarter of the year.
Now, also, too, remember that one of the big topics that we're going to continue to focus on this week, tariffs and trade deals. And I think it's fair to say that the market might be overestimating the timing of some trade deals. And I say this because, over the weekend, Trade Secretary Scott Bessent came out. And he said, the time frame for a trade deal with China, or at least to hammer one out, is likely to be months.
So if you're thinking about this like I am, and you're thinking about how the potential supply chain issues that we're going to have could perk up inflation, you put them together. And you say that the market could be potentially underestimating the trade deal timetable and overestimating the number of rate cuts the Fed could deliver this year.
In other words, even as we continue to march through the March quarter earnings season, we will want to tread carefully. And we will with the portfolio. That is our roadmap for the week. Please be sure to check your emails, your alerts. We want to make sure you're getting our latest thoughts. And if we make any moves with the portfolio, we want you right there with us. We've got a lot more coming your way. Stay tuned.
At the time of publication, TheStreet Pro Portfolio was long AAPL, MSFT, META, AMZN and NVDA.
