With about a third of the S&P 500 set to report earnings this week, it’s make-or-break for stocks. With the way things have been going, earnings reports will make them.
About 180 companies in the S&P 500 report numbers this week. The S&P 500 isn’t the entire stock market though. Roughly 780 companies in the Russell 3000 index report. It’s tough enough to track the S&P; it’s impossible to keep up with all of the Russell reporters.
For the Russell group, sales are expected to grow almost 10% to about $1.3 trillion. Earnings generated are estimated at about $160 billion, up from roughly $70 billion in the year-ago quarter.
It’s a huge earnings increase. Continuing growth at tech giants such as Apple and Microsoft help, and companies in the energy and materials sectors, including Exxon and United States Steel, are flipping from big losses to big gains.
The numbers have already been huge. More than a tenth of Russell 3000 companies have reported first-quarter numbers so far. Sales are up about 7% year over year. Earnings growth has been almost meaninglessly high.
More than 80% of the companies reporting so far have topped analyst estimates, with the company beating earnings forecasts by more than 40%. Wall Street just hasn’t captured how quickly things are getting better.
Faster than expected improvement is good news for stocks for the remainder of this year—if they can keep it up.
—Al Root
*** Barron’s is honoring women across the industry for their leadership, accomplishments, and contributions. The 2021 list includes Ruth Porat, Penny Pennington, Ann Miura-Ko, and more. New profiles will be published weekly—see the full list and read the newest profiles here.
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It’s Going to be a Busy Week for FANG, Other Earnings
Tesla kicks off earnings week Monday, followed by reports from Apple, Facebook, Amazon and others as one-third of the S&P 500 lays out their recent quarter. While there will be easy comparisons to last year’s pandemic-hit first quarter, companies are still recovering unevenly.
- Tesla surprised analysts by delivering nearly 185,000 vehicles in the first quarter. Founder Elon Musk will host Saturday Night Live next month, offering a boost of free advertising to the brand at a time when the safety of its battery-powered vehicles are in question after a recent crash in Texas.
- Apple’s report Wednesday will be hard to top the fourth quarter, its most profitable yet. The iPhone maker’s sales are expected to jump 32%, to $76.7 billion, and it recently just unveiled a new iPad and other next-generation gadgets.
- Facebook sales are seen rising 34% to $23.7 billion. Two analysts recently boosted their price targets for the social networking company’s stock following a powerful earnings report from Snap, which showed momentum in digital advertising spending.
- Amazon is expected to show a 39% jump in revenue to more than $104 billion, its second consecutive $100 billion-quarter after the pandemic drove shopping online.
What’s Next: Earnings are on track to rise 33.8% for S&P 500 companies, according to FactSet, based on actual and estimated numbers. That would mark the highest percentage increase since the third quarter of 2010. But the Federal Reserve could rattle cages with its comments on monetary policy midweek.
—Liz Moyer
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More Than Half of Americans Approve of Biden After First 100 Days
President Joe Biden will mark his 100th day in office later this week with his first address to a joint session of Congress on Wednesday and the rollout of his American Families Plan focused on child care and education. New polls out Sunday say more than half of Americans approve of his performance so far.
- An NBC News poll released Sunday said 53% of Americans approve of Biden’s job performance, including 90% of Democrats, 61% of independents and 9% of Republicans. The poll of 1,000 adults conducted from April 17 to 20 said 39% of respondents disapprove.
- Biden’s approval was highest, 69%, for his handling of the pandemic, followed by 52% for his handling of the economy, 52% on uniting the country, and 49% on race relations. On the other hand, 59% dislike his approach to border security and immigration and 55% dislike his handling of guns.
- Fifty-nine percent of NBC poll respondents called Biden’s nearly $2.3 trillion infrastructure plan a good idea, while 21% disagree with it.
- In its own poll Sunday, Fox News said 54% of voters approve of Biden’s performance in the first 100 days of his presidency, lower than Barack Obama (62%) and George W. Bush (63%), but higher than Donald Trump’s 45%.
What’s Next: Sen. Joe Manchin (D., W.Va.) told CNN on Sunday he prefers a smaller infrastructure bill focused more on highways and bridges, and Sen. Lindsey Graham (R., S.C.) told Fox News, “There’s probably an $800 billion and $900 billion infrastructure bill that we could all agree on.”
—Janet H. Cho
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Johnson & Johnson Vaccinations Resume Amid Declining U.S. Infections
The U.S. administered more than 3 million doses of Covid-19 vaccine for the third straight day on Sunday, and 42% of Americans have received at least one shot, after the Food and Drug Administration and the Centers for Disease Control and Prevention approved resuming Johnson & Johnson vaccines on Friday.
- The average number of confirmed coronavirus cases is at about 61,000 a day, down from more than 71,000 earlier this month, according to Johns Hopkins University. “We don’t want that to go up,” Dr. Anthony Fauci told ABC on Sunday.
- In Michigan, hospitals are admitting more young people, many with the virulent U.K. variant. “I am putting more patients in their 20s and 30s and 40s on oxygen and on life support than at any other time in this pandemic,” Dr. Erin Brennan, a Detroit emergency room physician, told the New York Times.
- More than 5 million people, or 8% of those who received Pfizer or Moderna vaccines, did not get their second shots, the CDC said. Some thought one shot was enough, some worried about side effects, and others had problems finding another dose. The flip side is 92% did get their second dose.
- Meanwhile, vaccine maker Moderna, which has administered more than 100 million shots in the U.S. and expects more than $18 billion in Covid-19 vaccine sales in 2021, is working on formulas that target multiple variants and that combine the flu vaccine with its Covid-19 booster.
What’s Next: According to a Washington Post-ABC News poll taken last week before the Johnson & Johnson shot was reinstated, nearly 3 in 4 unvaccinated Americans said they were not willing to get the one-shot vaccine.
—Barron’s staff
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Covid-19 Crisis Deepens in India as World Pledges Help
The number of daily coronavirus infections reached another record in India on Monday for the fifth consecutive day, with 352,991 new cases, as many world powers are pledging to send aid to help fight a surge that threatens to overwhelm the country’s hospital.
- Long-underfunded hospitals throughout the country have been refusing to treat patients as they face shortages of oxygen and beds.
- In some of the worst-hit cities, bodies are burned in makeshift facilities offering mass services, Reuters reported.
- Only 1.6% of the Indian population has been vaccinated so far, and 8.5% have received at least one shot of one of the vaccines.
- U.S. President Joe Biden and European Commission President Ursula von der Leyen promised on Sunday to send oxygen, equipment, protective equipment and raw materials for vaccines to India. They were joined on Monday by the U.K.
What’s Next: The speed and virulence of the current wave of the pandemic in India is alarming medical authorities worldwide, who fear it could become a breeding ground for new and more aggressive variants of the virus.
—Pierre Briançon
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Oscars Return With Diversity-Focused Awards as Industry Tries to Look Beyond Coronavirus
Nomadland on Sunday night won Oscars for best picture, best actress (Frances McDormand), and best director as Chloé Zhao became the first woman of color—and second woman ever—to receive the top prize in the history of the awards.
- In all, 15 women won 17 Oscars, the Film Academy said. Youn Yuh-jung became the first Korean to win an Oscar as she took home the award for best supporting actress in family drama Minari. Daniel Kaluuya won best supporting actor for his role in Judas and the Black Messiah.
- The 93rd Academy Awards ceremony was subdued, after being delayed because of the pandemic and reformatted to abide by social distancing rules. It served as an opportunity for industry professionals to express their hopes for a turnaround once movie theaters reopen.
- Streaming giant Netflix, which had two contenders in competition for best movie, failed again to garner the top prize but won seven lesser awards—the most of all studios—including best documentary for My Octopus Teacher.
What’s Next: McDormand begged viewers to watch films “on the largest screen possible,” but the massive eruption of streaming throughout the pandemic has upended the movie business, and the industry is still trying to cope with the consequences.
—Pierre Briançon
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MarketWatch Wants to Hear From You
What do people 72 and over need to know about required minimum distributions? If you think RMD rules are just a minor nuisance that you can safely ignore, think again.
A MarketWatch correspondent will answer this question soon. In the meantime, send any questions you would like answered to thebarronsdaily@barrons.com.
***
—Newsletter edited by Liz Moyer, Stacy Ozol, Matt Bemer, Ben Levisohn
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