Stocks are well in the red this afternoon ahead of a number of important Big Tech earnings reports. The S&P 500, Dow 30 and Nasdaq Composite are each down by around 1% so far. Why are stocks down today?
Well, investors seem to be a bit skittish ahead of some important earnings calls. Indeed, tech giants Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) are due to release results after the bell today. Both Alphabet and Microsoft stock have performed notably well this year, up about 18% and 16% respectively year-to-date (YTD).
Analysts are primed for a positive earnings beat today, keeping in-line with this year’s trend. Indeed, about 60% of companies have beat Wall Street sales projections for the period, with 70% surpassing earnings expectations. While this is technically below their long-term average, after 2022’s bleak stock performance, investors have reason to be pleased heading further into the second quarter.
For Q1, Alphabet is projected to report EPS of $1.06. This is something of a slowdown from Q4 2022 projections which Alphabet failed to meet, reporting EPS of $1.05. On the earnings front, Alphabet has had something of a rough time recently, missing each EPS estimate the last four quarters.
Meanwhile, Microsoft is expected to announce earnings of $2.22 per share for the quarter. This is slightly below last quarter’s estimate which the company narrowly beat, reporting $2.32 per share. Unlike its search engine competitor, Microsoft is coming off a string of wins, beating earnings estimates in three out of its last four quarters.
Tech earnings are seemingly Wall Street’s topic of the day. Amazon (NASDAQ:AMZN) and Meta Platforms (NASDAQ:META) also have earnings calls scheduled for later this week.
What else is pushing down stocks today?
Why Are Stocks Down?
While Wall Street seems preoccupied with the upcoming tech earnings, that’s likely not the only reason for today’s market slump. This morning, the Conference Board released its April Consumer Confidence Index update, which wasn’t particularly promising.
The Consumer Confidence Index, which tracks consumers’ perception of current and future business and market conditions, fell from 104 in March to 101.3 in April. This is a fairly notable drop, primarily due to deteriorating future expectations.
Indeed, the Expectations Index fell from 74 in March to 68.1 in April. Excluding December 2022, the Expectations Index has now stagnated below 80 for every month since February of last year. That’s a troubling recession indicator.
Ataman Ozyildirim, Senior Director of Economics at The Conference Board, said the following about the report:
“Consumers became more pessimistic about the outlook for both business conditions and labor markets […] Compared to last month, fewer households expect business conditions to improve and more expect worsening of conditions in the next six months. They also expect fewer jobs to be available over the short term.”
Interestingly, the Present Situation Index did actually improve slightly during the period, increasing to 151.1 from 148.9. However, that clearly wasn’t the predominant insight from the report.
Lastly, markets may also be backtracking from First Republic Bank’s (NYSE:FRC) faux rally yesterday. One of major players of the banking crisis last month, FRC stock jumped 12% Monday before reporting a net loss of $72 billion in deposits in Q1 2023. FRC stock is now down by more than 40% today.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
