RPT-Wall St Week Ahead – With the market at its limit, investors are looking to the tech trio


(Repeats the story published on Friday without changes)

By Noel Randewich

SAN FRANCISCO, October 19 (Reuters) – Pressure is underway for Amazon, Alphabet and Microsoft as they prepare to report quarterly results at a time when confidence in market leaders seems increasingly fragile and risks derailing the rally Wall Street.

After concerns about higher interest rates caused a strong sell-off in early October and again on Thursday, the S & P 500 remains down 5% from the record close on September 20, with tip including Amazon.com Inc., Alphabet Inc., Netflix Inc. and Facebook Inc. show little of their vitality in recent years.

A quarterly Microsoft Corp report, Wednesday after the bell, followed by Alphabet and Amazon at the end of Thursday, will influence the sentiment on Wall Street.

"The stock market is at a critical point here," said Kurt Brunner, portfolio manager at Swarthmore Group in Philadelphia, Pennsylvania. "To not get much worse, I think you need to see Amazon and Alphabet have good numbers."

With investors worried about the rise in Internet regulation and criticism of Facebook's user data management, the social media company fell 29 percent from its historic high on July 25th. Alphabet is 15% lower than the record closing on July 26, while Amazon has fallen 12 percent this month.

Microsoft also blocked after doubling in the last two years.

Nonetheless, Netflix and Amazon are up 81% and 51% respectively over the previous year, highlighting their role among the cream creams of Wall Street. The largest component of S & P 500, Apple Inc gained 28% in 2018, even after falling 7% from its historic high on October 3rd.

A 5% increase in Netflix on Wednesday after its optimistic quarterly report has allayed fears that the video streaming company is losing strength.

But this has done little to revive his fellow-fellows in the so-called FANG group that also includes Amazon, Google-parent Alphabet and Facebook. In the past, these stocks have often grown together.

Powerful events of Facebook, Amazon, Alphabet, Apple, Microsoft and Netflix in recent years have made the mandatory actions for portfolio managers, thus making their property widespread that are at risk of a heavy sell-off in the event of a majority of investors " opinions on them change for the worse.

"So many funds are invested in the same actions, they have become less crowded last week, but at this point it is hard to say if we are going to shake off everything and move to new highs in a month or if we will test lower", warned Dennis Dick, a proprietary trader at Bright Trading LLC in Las Vegas.

The recent slide left Amazon and Facebook trading at discounted multiples of their expected earnings. According to data from Refinitiv, last week Amazon's price / earnings ratio reached 74, a minimum of seven years. Facebook this month has traded 18 times the expected earnings, the lowest since its 2012 public announcement.


Aided by a strong economy and deep corporate tax cuts, S & P 500 earnings per share are expected to increase by 22% in the third quarter, according to Refinitiv's I / B / E / S data. But some investors are already seeing slower growth in 2019, when the benefits of corporate tax cuts will be a year and will no longer create an extra boost.

Investors are also concerned about the potential repercussions of US President Donald Trump's trade conflict with Beijing, and of higher interest rates such as the strong US economy and low unemployment pressure prices.

According to analysts, according to analysts, according to analysts, according to analysts, a non-GAAP net profit in September was 1.54 billion dollars or $ 3.12 per share, compared to $ 256 million a year. year ago.

Alphabet's non-GAAP September net profit rose 9% to $ 7.36 billion, or $ 10.43 per share.

Microsoft's non-GAAP net income rose 13% to $ 7.46 billion, or 96 cents per share.

Facebook reports its quarterly results on October 30th, followed on November 1st by Apple.

Amazon and Alphabet are widely considered technological companies. However, within the S & P Global Dow Jones Indices Classification Index, Amazon is part of the voluntary sector, and Alphabet is part of the recently renamed communications services industry. (Reporting by Noel Randewich, editing by Richard Chang)

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