3 Earnings Reports Next Week That Can Make or Break the Market

With earnings season well underway, we’ve already received interesting updates from some of the biggest companies in the stock market. This period of time is particularly important for the overall direction of the market since we are able to see the impact of the global pandemic on major companies’ earnings for an entire quarter. With the rally off of the March lows, it safe to say that the market has priced in a lot of optimism at this time. That’s why next week could be a turning point that defines the direction of the stock market for the rest of the year due to the massive companies that are reporting their results.

Trading around earnings reports is notoriously difficult, but it’s still very important for investors and traders to be cognizant of companies whose earnings can shift the trajectory of the entire market. Next week, there are 3 companies in particular that can have a massive impact on the overall market direction going forward. Let’s take a look at 3 companies that are reporting earnings next week that can either make or break the market.

MarketBeat: Week in Review 7/20 - 7/24

Amazon (NASDAQ: AMZN)

It’s hard to find many negatives when talking about Amazon, a stock that has been on fire and risen up over 60% this year. The e-commerce giant will report Q2 earnings after the market close on Thursday, July 30^th and it will certainly be one of the most anticipated stocks to report next week. CEO Jeff Bezos mentioned during the company’s Q1 earnings report that Amazon expects to spend roughly $4 billion or more if it’s operating profits to deal with COVID-19 related expenses. If Amazon’s forward guidance mentions more operating income spending like that, it could be negatively perceived. It will be very interesting to see how the market reacts and how pandemic-related spending has ultimately impacted Amazon’s bottom line for Q2.

With e-commerce booming as more people shop from home than ever before and cloud infrastructure demand for Amazon Web Services accelerating, many are expecting a stellar Q2 from this company. However, there are other factors that might lead to a disappointing market reaction. For example, the company continues to delay Amazon Prime Day which brought the company roughly $7 billion in sales last year. If it continues to be postponed, there’s a chance Amazon Prime day could be canceled this year. There is also chatter about an antitrust lawsuit and it just so happens that Jeff Bezos is scheduled to testify before Congress on Monday of next week, mere days before the company reports on July 30^th.

Apple (NASDAQ: APPL)

Another stock that reports next week which will make a large impact on the market is Apple. This is a company that has been one of the safest bets on Wall Street for years. With a $1.6 trillion-dollar market capitalization, Apple makes up a whopping 5.8% of the entire S&P 500 index. This heavy index weighting is one of the big reasons why it is such an important earnings report for the overall market.

Last quarter, Apple flexed its financial muscles by raising its dividend by 6% and increasing its share buyback program in the midst of a pandemic. The company is expected to report a year-over-year decline in earnings largely driven by lower revenues, which means if Apple misses the consensus-outlook it could be bad news for the market. Keep in mind that Apple has been four for four in beating consensus EPS estimates over the last 4 quarters, but that streak could come to an end since this unpredictable quarter features the period between April and June when the global pandemic was causing some major business disruptions. Perhaps the most important thing to look out for is management’s forward guidance and commentary about the second half of 2020. There’s also the fact that like Amazon, Apple is facing antitrust scrutiny as well and CEO Tim Cook is also scheduled to testify before Congress on Monday.

Visa Inc (NYSE: V)

When global payments processor Visa reports earnings next week, investors will get a direct glimpse into how consumer spending is being affected by the pandemic and an uncertain economy. Q3 revenues for the payments giant are expected to drop by roughly 17% to $4.81 billion versus $5.84 billion the year before. This anticipated drop has a lot to do with lower transaction volume as many stores were closed throughout the quarter. With that said, there is optimism for a potential beat driven by increased digital payment volume as more and more people shopped online.

Although analyst estimates have already accounted for a large drop in earnings for this company if Visa falls significantly short of the consensus outlook it could trigger a downside move and increase overall pessimism about the economic recovery. Make sure to check for this company’s Q3 earnings report when it is released on Tuesday, July 28^th.