Flood of Earnings, Antitrust Storm Brewing for Amazon, and Disney’s Bullish Rebound
July 31, 2023
Investors are bracing for a second consecutive week of earnings reports, with nearly a third of S&P 500 companies set to disclose their numbers over the next five trading days. The week’s earnings calendar features key reports from heavyweight corporations including Apple (AAPL), Merck (MRK), Pfizer (PFE), Caterpillar (CAT), and Amazon (AMZN).
Amazon Faces Potential FTC Antitrust Lawsuit
However, it’s not just earnings reports that are anticipated to keep the Amazon C-suite busy this week. Media reports suggest the Federal Trade Commission could file its highly anticipated antitrust lawsuit against Amazon as early as next week. This lawsuit could challenge Amazon on several fronts, especially with regards to the practices of the Amazon Prime business.
Key Economic Reports: Construction Spending, U.S. Manufacturing PMI, and Factory Orders
On the economic front, the week ahead will feature key reports, including data on construction spending, U.S. manufacturing PMI, and factory orders – all due before the July jobs report slated for release on August 4.
Nonfarm payroll employment is forecasted to rise by 200K, slightly down from the 209K job additions in June. This data is expected to show a moderation from recent trends but will continue to highlight the tightness of the labor market. The jobs report is likely to reignite debates over whether the Federal Reserve’s policy is too loose or too tight.
Earnings Spotlight for the Week Ahead
In IPO news, no new debuts are expected this week. However, the quiet period for Prestige Wealth (NASDAQ:PWM) is set to expire on July 31, enabling analysts to post ratings. Also, the IPO lockup period for Atlas Energy Solutions (NYSE:AESI) expires this week.
On the dividend front, companies projected to boost their quarterly payouts include Diamondback Energy (NASDAQ:FANG), Sturm, Ruger (RGR), KLA Corp (KLAC), Wingstop (WING), and Papa John’s International (PZZA).
Corporate Product Unveils
In terms of corporate events, Datadog (DDOG) is slated to hold its two-day DASH annual conference on August 2-3, where the company is anticipated to introduce a new AI product. Fisker (FSR) will present its future product portfolio at the inaugural Product Vision Day event on August 3.
Bullish Outlook for Disney: Buy on the Cheap
Media spotlight this week features Disney (DIS), which appears to be rebounding. The company has seen a return to strong profitability following cost-cutting measures, strategic redirections, and the resurgence of pent-up demand for travel and experiences. In the long term, Disney’s direct-to-consumer business is anticipated to resemble Netflix’s (NFLX), which currently dominates the streaming market with a nearly 20% operating profit margin. Given this bullish outlook, buying Disney on the cheap is recommended.