Investors are gearing up for what is likely to be another busy week in markets, with a host of major tech companies due to report earnings and the January jobs report and Iowa caucuses for the 2020 U.S. presidential election also on the calendar.
All of this takes place as the world continues to monitor developments with the Wuhan coronavirus, which the World Health Organization designated an international emergency last week.
Over the past week, a rising number of global businesses have announced plans to shift or temporarily halt operations that could leave customers and workers exposed to the deadly virus. Airlines, including American Airlines and Delta, have suspended flights to China, and JP Morgan Chase, Ford and Kraft Heinz have each rolled out employee travel bans to and from China. Other corporations, including Starbucks and McDonald’s, have temporarily closed stores in China near the epicenter of the outbreak.
Goldman Sachs economists last week estimated the outbreak of the coronavirus could lower annual-average 2020 GDP growth in China by 0.4 percentage points. It’s also likely to generate a 0.4 percentage point drag on U.S. GDP in the first quarter, followed by a rebound boosting second-quarter growth by the same amount, the economists said.
More earnings
Google-parent company Alphabet (GOOG, GOOGL) will round out so-called “FAANG” big tech earnings with its quarterly earnings report after market close on Monday.
Wall Street expects Alphabet will demonstrate continued momentum in its online and mobile advertising businesses, by far its largest contributors to overall revenue. In the prior quarter, Alphabet’s advertising revenue had risen 17% to $33.9 billion.
Alphabet’s advertising results will especially be of interest given the Street’s icy response after peer internet giant Facebook reported earnings last week. Though the social media giant reported record fourth-quarter revenues that beat expectations, slowing growth in the U.S. and Canada stirred up concerns that the company was already saturated in its biggest advertising demand centers.
For Alphabet, last quarter’s profitability was hit by high costs as the company invested heavily to build out its cloud computing infrastructure and compete with the likes of Amazon and Microsoft.
“We still believe sell-side margin forecasts for GOOGL are too high given the continued mix shift to lower margin businesses like YouTube, Cloud, and hardware as well as increased hiring, particularly for GCP [Google Cloud Platform],” BMO Capital Markets analyst Daniel Salmon wrote in a note.
The reported quarter also marks the first since Alphabet announced it would be purchasing smartwatch maker Fitbit, apparently putting the company in competition with Apple (AAPL) in the wearables space.
Alphabet is expected to delivered GAAP earnings per share of $12.50 on revenue of $38.4 billion for its fiscal fourth quarter, according to estimates compiled by Bloomberg.
Later in the week, recently public company Uber (UBER) will also report quarterly results, as the stock wallows well below its IPO price of $45 per share last year.
Uber, along with peer ride-hailing giant Lyft, has endured a stock drop driven by cautiousness over the profitability prospects of the ride-hailing space as a whole. Uber has targeted profitability in 2021.
“We view December results as a key step in the right direction for both Lyft and Uber going forward to gain much needed credibility from the Street,” Wedbush analyst Dan Ives wrote in a note last week.
“To this point, we believe that both will report modest upside to results as we are also looking for updated commentary on the current market dynamics of North America, Uber Eats (recent sale of India business to Zomato a major step in the right direction) with the changing European environment, take rate dynamics, improvement in profitability, and the hot button California Bill AB5,” Ives added.
Uber is expected to post an adjusted loss of 61 cents per share on sales of $3.7 billion in the fourth quarter.
Jobs report
The January jobs report will round out this week’s busy calendar.
Consensus economists expect non-farm payrolls rose by 160,000 in January, and the unemployment rate held at a 50-year low of 3.5%.
For December, the U.S. economy added a slightly lighter than expected 145,000 jobs, while the unemployment rate held at a 50-year low of 3.5%.
But the print was taken with mixed reception largely due to the reported slowdown in wage growth. Average hourly wages rose just 0.1% on a monthly basis and 2.9% on a yearly basis in December, representing the the slowest rise since July 2018. Consensus economists expect wages picked up slightly to a 3.0% year-over-year pace of growth in January.
“Any further weakness would reinforce our caution on spending, especially if the virus concerns intensify in the weeks ahead,” James Knightley, chief international economist for ING, wrote in a note Friday.
And December’s jobs report had highlighted underlying weakness in certain industries, including manufacturing. Many economists expect softness in the goods-producing sector to continue, with consensus analysts anticipating manufacturing jobs fell by 4,000 in January.
“The underlying trend in payroll growth has picked up over the past six months to 180,000,” Ian Shepherdson of Pantheon Macroeconomics wrote in a note Friday. “Manufacturing payrolls are still struggling, with some layoffs related to the 737 Max production halt likely to weigh on January’s figures. There are clearer signs of a turnaround in the bigger services sector.”
Earnings calendar
Monday: Sysco Corporation (SYY) before market open; Hexcel Corporate (HXL), Alphabet (GOOG, GOOGL) after market close
Tuesday: Spectrum Brands Holdings (SPB), Waddell & Reed Financial (WDR), Clorox (CLX), McKesson (MCK), Waters Corporation (WAT) before market open; Aflac (AFL), Genworth Financial (GNW), Jack Henry & Associates (JKHY), Ford (F), Mueller Water Products (MWA), Cerner Corporation (CERN), Gilead Sciences (GILD), Disney (DIS), Snap (SNAP), Match Group (MTCH) after market close
Wednesday: General Motors (GM), Boston Scientific Corporation (BSX), Humana (HUM), Merck & Co. (MRK) before market open; MetLife (MET), Peloton (PTON), Werner Enterprises (WERN) after market close
Thursday: Twitter (TWTR), Intercontinental Exchange (ICE), Dunkin’ Brands Group (DNKN), Kellogg Company (K), Tyson Foods (TSN), Yum! Brands (YUM), Arrow Electronics (ARW), Old Dominion Freight Line (ODFL), Spirit Airlines (SAVE), Becton, Dickinson and Company (BDX), Cardinal Health (CAH), Cigna (CI) before market open; FleetCor (FLT), Wynn Resorts (WYNN), Post Holdings (POST), Uber (UBER) after market close
Friday: CBOE Global Markets (CBOE), AbbVie (ABBV) before market open
Economic calendar
Monday: Markit US manufacturing PMI, January final (51.7 expected, 51.7 prior); Construction spending month on month, December (+0.5% expected, +0.6% prior); ISM manufacturing, January (48.5 expected, 47.8 prior); Wards total vehicle sales, January (16.8 million expected, 16.7 million prior)
Tuesday: Factory orders, December (+1.1% expected, -0.7% prior); Durable goods orders, December final (+2.4% expected, +2.4% prior); Non-defense capital goods shipments excluding aircraft, December final (-0.4% prior)
Wednesday: MBA Mortgage Applications, week ended January 31 (+7.2% prior); ADP employment change, January (160,000 expected, 202,000 prior); Trade balance, December (-$47.8 billion expected, -$43.1 billion prior); Markit US services PMI, January final (53.2 expected, 53.2 prior); Markit US composite PMI, January final (53.1 prior); ISM non-manufacturing index, January (55.1 expected, 54.9 prior)
Thursday: Challenger job cuts year on year, January (-25.2% prior); Unit labor costs, 4Q preliminary (+1.0% expected, +2.5% prior); Non-farm productivity (+1.5% expected, -0.2% prior); Initial jobless claims, week ended February 1 (215,000 expected, 216,000 prior); Continuing claims, week ended January 25 (1.703 million prior)
Friday: Change in non-farm payrolls, January (+160,000 expected, +145,000 prior); unemployment rate, January (3.5% expected, 3.5% prior); Average hourly earnings month on month, January (0.3% expected, 0.3% prior); Average hourly earnings year on year, January (3.0% expected, 2.9% prior); Wholesale inventories month on month, December final (-0.1% prior); Consumer credit, December ($15 billion expected, $12.513 billion prior)
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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