This week ahead || Jul 17th - Jul 21st 2023
Here's some big news for the week ahead.
Tesla, Netflix, banks on tap as earnings season ramps up: What to know this week
Earnings season is set to be in full swing in the upcoming week, with Bank of America and Goldman Sachs providing insight into the financial system's response to previous bank failures. Netflix and Tesla will be the first tech giants to report Q2 results. Last week, the US economy showed positive signs with inflation decreasing and consumer sentiment reaching a two-year high, leading to market gains. The Nasdaq had its best week since March, rising over 3.3%, while the S&P 500 and Dow Jones Industrial Average increased by about 2.3%. Financials started earnings season with varying outcomes, as JPMorgan and Wells Fargo performed well, while Citigroup struggled due to investment banking declines. This week, investors will focus on dealmaking as Bank of America, Morgan Stanley, and Goldman Sachs report results. Tesla and Netflix will also be closely watched, with an emphasis on Tesla's non-GAAP auto gross margin and Netflix's handling of work stoppages in Hollywood. Overall, S&P 500 companies' earnings are projected to decline 7% this quarter, potentially marking the bottom of the current earnings recession. Analysts believe that companies beating estimates could help maintain stock gains, but a substantial beat might be required to trigger a significant market rally.
Dow Jones Futures: Market Had Great Week, But This Risk Is Rising; Tesla Cybertruck Production Begins
Dow Jones, S&P 500, and Nasdaq futures are set to open Sunday evening. The week ahead will be highlighted by Tesla's earnings, coinciding with the start of Cybertruck production. The stock market had a strong week, with the S&P 500 and Nasdaq reaching new 52-week highs, but caution is advised due to extended conditions in the Nasdaq, leading to potential pullback risks. The Nasdaq 100 will undergo a special rebalance to reduce the dominance of certain companies. Microsoft's acquisition of Activision Blizzard faced regulatory challenges, but the U.S. FTC's attempt to block the merger was rejected. Meanwhile, Broadcom received EC approval for its merger deal with VMware. Exxon Mobil is set to acquire Denbury Resources, and Stratasys received an enhanced offer from 3D Systems. Tesla's earnings are expected to show modest gains, and the company continues to offer discounts in Q3. The first Tesla Cybertruck has been revealed as production commences. Investors are optimistic about Tesla's performance, with the stock reaching a 2023 high.
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Microsoft signs agreement to keep Call of Duty on Playstation
Microsoft Gaming CEO Phil Spencer announced on Sunday that Microsoft has signed an agreement to keep Call of Duty on PlayStation following the acquisition of Activision Blizzard. This move is aimed at easing concerns about the acquisition's impact on competition. Microsoft President Brad Smith also emphasized the company's commitment to ensuring that Call of Duty remains available on more platforms and for more consumers than ever before. The agreement comes in response to the FTC's concerns that the deal could harm consumers and potentially shut out rivals like Sony Group. As part of its efforts to address these concerns, Microsoft had previously agreed to license Call of Duty to rivals, including a 10-year contract with Nintendo, contingent on the merger's completion.
4 big deal reports: FTC falls flat in attempt to block Microsoft-Activision
Microsoft-Activision: Microsoft's proposed acquisition of Activision Blizzard, the largest deal in gaming history, faces regulatory challenges in the U.S. and the U.K. The U.S. Federal Trade Commission lost its attempt to temporarily block the merger via a court injunction, while the U.K.'s Competition and Markets Authority extended its review period after receiving a modified proposal from Microsoft. Broadcom-VMware: Broadcom received conditional approval from the European Commission for its $61 billion acquisition of VMware. Legal clearance was also obtained in other countries and Broadcom is confident of closing the deal within its fiscal year 2023. Exxon Mobil-Denbury: Exxon Mobil agreed to acquire Denbury Resources for $4.9 billion in an all-stock transaction. Stratasys-3D Systems: Stratasys shares surged after 3D Systems made an improved offer to merge with Stratasys. The latest offer would see each Stratasys share convert into $7.50 in cash and 1.5444 shares of the combined company. Stratasys also received a revised proposal from Nano Dimension to purchase a significant portion of its outstanding shares.
