What to Expect This Week: Amazon, Exxon, Eli Lilly Earnings, and Key Economic Indicators

The Earnings Extravaganza: Amazon, Exxon, and Eli Lilly

Amazon: A Tech Giant Under the Microscope

Amazon is set to release its third-quarter earnings report on October 31, 2024. Analysts are anticipating an earnings per share (EPS) of $1.14, with revenues projected to reach $157.2 billion, marking a year-over-year increase of 21.3% and 9.9%, respectively. Historically, Amazon has a track record of outperforming earnings estimates, and this quarter might be no different, thanks to robust sales during Amazon Prime Day and continued growth in its cloud computing arm, Amazon Web Services (AWS).

Key areas to watch include:

• AWS Performance: AWS remains a cornerstone of Amazon’s profitability, holding a 32% market share. Its growth trajectory will be crucial, especially with rising competition from Microsoft Azure.
• Advertising Revenue: With a 20% year-over-year growth, Amazon’s advertising segment is becoming an increasingly important revenue stream.
• AI and Project Kuiper: Amazon’s investments in AI and its satellite internet initiative, Project Kuiper, are expected to drive future growth, albeit with significant upfront costs.

ExxonMobil: Navigating a Challenging Energy Landscape

ExxonMobil is scheduled to announce its earnings on November 1, 2024. Analysts expect an EPS of $1.95, reflecting a 14.1% decline from the previous year, despite a 3.8% increase in revenue to $94.24 billion. The energy sector has faced headwinds, with earnings estimates revised downward, highlighting the challenges Exxon faces in maintaining profitability amid fluctuating oil prices and geopolitical tensions.

Investors should focus on:

• Revenue Growth: Despite the EPS decline, revenue growth indicates resilience in Exxon’s operations.
• Market Conditions: The broader energy market’s performance and Exxon’s strategic responses to global challenges will be pivotal.

Eli Lilly: Riding the Wave of Pharmaceutical Innovation

Eli Lilly is set to report its earnings on October 30, 2024, with expectations of a significant EPS increase to $1.53, a staggering 1430% rise year-over-year. Revenues are projected at $12.03 billion, up 26.7%. This impressive growth is driven by successful product launches and strong sales across its pharmaceutical portfolio.

Key points include:

• Product Performance: Sales of key drugs like Cyramza and Humalog will be closely monitored.
• Innovation and Approvals: Recent approvals, such as Kisunla for Alzheimer’s, could bolster future earnings.

Economic Indicators: A Crucial Week for Data

September Jobs Report: A Labor Market Litmus Test

The September jobs report, due on October 27, 2024, is a critical piece of the economic puzzle. With expectations of 140,000 jobs added and an unemployment rate holding steady at 4.2%, this report will provide insights into the labor market’s health. However, the actual figures could surprise, as previous reports have shown stronger-than-expected job growth, with 254,000 jobs added in September, and a drop in the unemployment rate to 4.1%.

PCE Inflation and GDP: Gauging Economic Momentum

Investors will also be eyeing the Personal Consumption Expenditures (PCE) inflation report and the third-quarter GDP data. The PCE inflation is expected to show a decline, aligning with the Federal Reserve’s target, while GDP growth is anticipated to be robust, with estimates ranging from 2.3% to 3.2% for Q3 2024. These figures will be instrumental in shaping the Fed’s monetary policy decisions in the coming months.

Housing and Manufacturing Data: Sector-Specific Insights

Housing and manufacturing data releases will provide additional context to the economic narrative. With housing inflation pressures and manufacturing activity updates, these reports will offer a sector-specific view of economic health and potential investment opportunities.

Big Tech and Beyond: A Week of Earnings

This week is also significant for Big Tech, with earnings reports from Alphabet, Microsoft, Meta, Apple, and Amazon. These companies, part of the “Magnificent Seven,” are expected to show an 18.1% year-over-year earnings growth, a stark contrast to the broader S&P 500’s modest 0.1% growth. Investors will be keen to see how these tech giants are navigating challenges such as high capital expenditures in AI and maintaining growth momentum.

Other Key Players: Pharmaceuticals, Restaurants, and Oil Producers

Beyond tech, earnings from pharmaceutical giants like Pfizer and Merck, restaurant chains, and oil producers will provide a comprehensive view of corporate America’s health. These reports will highlight sector-specific trends and potential investment opportunities.

Market Sentiment and Outlook

As we navigate this busy week, market sentiment remains cautiously optimistic. The Nasdaq Composite recently hit an all-time high, while the S&P 500’s six-week winning streak ended, reflecting a mixed market mood. The CBOE Volatility Index’s rise above 20 indicates increased market volatility, suggesting that investors should brace for potential fluctuations.

Actionable Insights for Investors

1. Diversify Portfolios: With earnings reports spanning multiple sectors, consider diversifying investments to mitigate risks and capitalize on growth opportunities.
2. Monitor Economic Data: Keep a close eye on economic indicators, as they will influence market trends and the Federal Reserve’s policy decisions.
3. Focus on Long-Term Growth: Despite short-term volatility, focus on companies with strong fundamentals and growth prospects, particularly in tech and pharmaceuticals.

In conclusion, this week promises to be a defining moment for the markets, with a confluence of earnings reports and economic data shaping the investment landscape. By staying informed and adaptable, investors can navigate these developments and position themselves for success in the ever-evolving financial markets.