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SAN FRANCISCO – Pressure is strong for Amazon, Alphabet and Microsoft as they prepare to release their quarterly results at a time when trust in these market leaders seems increasingly fragile and risks derailing Wall's recovery Street.
After fears over rising interest rates that triggered a strong sell-off in early October and again on Thursday, the S & P 500 remains down 5% from its record high of September 20th, with top notch including Amazon.com Inc), Alphabet Inc. (GOOGL.O), Netflix Inc. (NFLX.O) and Facebook Inc. (FB.O) show very little of their vitality in recent years.
A quarterly report from Microsoft Corp (MSFT.O) released Wednesday after the bell, followed by Alphabet and Amazon on Thursday, will influence the general climate on Wall Street.
"The stock market is at a critical juncture here," said Kurt Brunner, portfolio manager of the Swarthmore Group in Philadelphia, Pennsylvania. "For this to not get worse, I think you need to see Amazon and Alphabet publish good numbers."
Investors worrying about the increased regulation of the Internet and criticism regarding the processing of user data by Facebook, the stock of the social media company has fallen by 29% compared to the record reached on July 25 . percent this month.
Microsoft has also stalled after doubling over the past two years.
Nevertheless, Netflix and Amazon remain up 81% and 51% respectively to date, highlighting their place among the best of the cream of the crop on Wall Street. The largest component of the S & P 500, Apple Inc. (AAPL.O), gained 28% in 2018, even after falling 7% from the October 3 record.
A 5% rise in Netflix on Wednesday after the release of its optimistic quarterly report has eased fears of seeing the video streaming company weaken.
But this did little to strengthen his peers in the FANG group, which also includes Amazon, Google-parent Alphabet and Facebook. In the past, these stocks have often increased together.
Powerful rebounds from Facebook, Amazon, Alphabet, Apple, Microsoft and Netflix over the past few years have made it a must-have for portfolio managers. opinions about them change for the worse.
"So many funds are invested in the same actions. There were fewer people last week, but it's hard to say if we're going to ruin everything and reach new highs in a month, or if we're going to test more down, "Dennis said. , an exclusive trader at Bright Trading LLC in Las Vegas.
The recent slide left Amazon and Facebook trading at multiple discounted expected earnings. Amazon's price / earnings guidance was 74, a seven-year low, according to Refinitiv data. This month, Facebook has traded as little as 18 times the expected earnings, the lowest since listing on the stock market in 2012.
GROWTH OF GAINS ROBUST
Helped by a strong economy and strong corporate tax cuts, earnings per share of the S & P 500 index is expected to rise 22% in the third quarter, according to I / B / E data. / S of Refinitiv. However, some investors are already planning slower growth in 2019, while the benefits associated with corporate tax cuts are going to be old by one year and no longer create an extra momentum.
Investors are also worried about the possible consequences of the trade dispute between US President Donald Trump and Beijing, as well as the rise in interest rates, linked to the strength of the US economy and low unemployment prices.
According to analysts, powered by its cloud computing business, analysts are expected to report non-GAAP net income for the September quarter of $ 1.54 billion, or $ 3.12 per share, compared with $ 256 million last year, according to Refinitiv.
Alphabet's September non-GAAP net income is expected to increase 9% to $ 7.36 billion, or $ 10.43 per share.
Microsoft's non-GAAP net income is expected to grow 13 percent to $ 7.46 billion, or 96 cents per share.
Facebook publishes its quarterly results on October 30, followed on November 1 by Apple.
Amazon and Alphabet are widely regarded as technology companies. However, as part of the industry-wide S & P Dow Jones index classification standard, Amazon is in the consumer discretionary sector and Alphabet is part of the recently renamed communications services sector.
Reuters
Reportage of Noel Randewich; Edited by Richard Chang
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