Biggest tech benefits matter more than ever


See here: Actions of Intel (INTC) plunged on Friday after the company said its next-gen chips would be delayed, while Snap’s stock fell after the company noted a spike in app users after the pandemic began was decreasing.

This sets the stage for a memorable earnings week in Silicon Valley, with expected results from Amazon, Apple, Alphabet and Facebook. The massive rise in shares of these companies – and the question of whether they are overvalued – means investors will be especially tuned in.

Facebook (FB), Amazone (AMZN), Apple (AAPL), Alphabet (GOOG) and Microsoft (MSFT), the five largest U.S. companies, now account for more than a fifth of the S&P 500’s value, up from 16% a year ago, Goldman Sachs said in a recent note to clients.

Those stocks have returned around 35% this year, while the other 495 stocks in the index have lost 5%, according to the investment bank.

The bulls are quick to point out that these companies’ shares are rising because their businesses are strong, with profits at least partially isolated from the Covid-19 shock.There are a lot of things on this point of view.

“Record concentration means the S&P 500 has never been more dependent on the continued strength of its major constituents or more vulnerable to an idiosyncratic shock to any of these stocks,” wrote the chief US equity strategist of Goldman Sachs, David Kostin.

An example: Apple shares climbed 26% in 2020, in part due to anticipation of new 5G phones being released this fall. But there is growing discussion that the timeline could be pushed back.

Deutsche Bank analysts said last Thursday in a note that they were increasingly confident that new iPhone launches will be postponed until November or December due to technical complications related to the coronavirus. This may not affect long-term earnings, but could undermine investor confidence.

How much has the US economy suffered this spring?

How hard did the pandemic hit the U.S. economy between April and June?

Investors will find out this week, providing crucial data on how strong the recovery is to pull the world’s largest economy out of a historic recession.

Economists polled by Refinitiv on average expect to learn that US production fell at an annualized rate of 34% in the last quarter. This is almost triple the peak-to-trough contraction recorded during the Great Recession, the Bank of America noted in a recent note to clients.

“This is a consumer-led slowdown, but we are likely to see significant delays on all major components of GDP,” US economist Alexander Lin said.

In the midst of a rapidly evolving health crisis, it’s tempting to view Q2 data as already out of date. But the information is crucial, both for economists trying to gauge the scale of a necessary rebound and for policymakers racing to Congress to approve additional stimulus measures targeting weak spots in the economy.

Senate Republicans are now planning to roll out their stimulus proposal early this week. Majority Leader Mitch McConnell said the Trump administration has requested more time to review the plan ahead of its unveiling.

They must act quickly, given the signs that the economic recovery has stalled in a renewed context outbreak of Covid-19 cases in Sun Belt states. Initial jobless claims rose for the first time since the end of March, and foot traffic in retail stores stabilized.

“The initial post-lockdown rebound has faded, the recovery is now expected to be bumpy and much slower on average,” said Paul Ashworth, chief US economist at Capital Economics. “This suggests that Congress would do well to provide additional tax support. “


Monday: Business climate in Germany; American durable goods; SAP and Hasbro benefits

Mardi: Confidence of American consumers; 3m (MMM), Harley Davidson (PIG), McDonalds (MCD), Pfizer (PFE), Photocopier (XRX), eBay (EBAY), Starbucks (SBUX) and Visa (V) gains

Wednesday: Pending home sales in the United States; Federal Reserve Interest Rate Decision; Boeing (BA), Your brands (OF), General Electric (GIVE), GM (GM), Spotify (PLACE), Facebook, Pay Pal (PYPL) and Qualcomm (QCOM) gains

Thursday: Germany and US GDP; Initial jobless claims in the United States; Alphabet (GOOG), Amazone (AMZN), Apple (AAPL), Comcast (CMCSA), Kellogg (K), Kraft Heinz (KHC), MasterCard (MA), UPS (UPS), Yum brands (YUM), Electronic arts (SHE) and Ford (F) gains

Friday: Manufacturing data in China; GDP of France, Spain, Italy and Europe; Personal expenses and income in the United States


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