With over 100 S&P 500 companies set to report first quarter financial results this week, investors are closely watching individual outlooks amid shifting policies from the Trump administration. Technology stocks, which have led the selling action during the tariff-induced market drawdown, will be in particular focus.
The “Magnificent Seven” tech stocks are down 23% or more from their recent 52-week high, making them key to understanding the market’s bottom. Wall Street strategists say that watching how these stocks react after a major earnings release will be crucial in determining if the market has reached its lowest point.
Alphabet (GOOGL) and Tesla (TSLA) are among the companies set to report this week. Alphabet shares are down 29% from their recent high, while Tesla stock is down 54%. Despite some bad news already being priced into Tesla’s stock, such as disappointing deliveries and lower earnings estimates, investors will be watching to see if the stock has been “rerated” low enough.
Fundstrat’s Tom Lee says that Tesla’s stock reaction after its earnings release will show how “washed out” key names in the stock market have become. Truist Co-CIO Keith Lerner notes that the recent sell-off is due to a weakening earnings outlook, making the upcoming earnings less about what companies say and more about how their stocks act.
If companies cut earnings guidance and the stock moves higher following the news, it will be an important sign that bad news has already been priced in. Investors are looking for this signal to determine if the market has reached its bottom.
Source: https://finance.yahoo.com/news/big-tech-earnings-could-reveal-if-stocks-are-washed-out–or-if-they-have-more-room-to-fall-164803222.html